LEAD YOUNG SEA & AIR FREIGHT CO LTD v. SIU KWOK LEUNG

DCCJ1883/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1883 OF 2004

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ASSESSMENT OF DAMAGES

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1.  The plaintiff carried on a transportation business.

2.  By a Chinese agreement signed by the plaintiff and defendant on or about 1 September 2002  (hereinafter called the “Chinese Agreement”), the defendant rented the plaintiff’s vehicle, bearing registration No. KR 4014 (hereinafter called the “Vehicle”), for his transportation business.  The plaintiff also authorised the defendant as its agent to act as driver of the Vehicle, or to engage other drivers for carrying out part of the plaintiff’s transportation business.  The defendant could accept other transportation business but his income should be shared with the plaintiff in a manner agreed.  The Chinese Agreement expressly provided that the relationship between the parties was not that of an employer and employee. 

3.  The defendant further agreed, by the Chinese Agreement, to comply with the laws of Hong Kong and the PRC.  If the defendant were convicted, the defendant and his driver would have to bear all economical and legal liability and damages, and to compensate the plaintiff for all economical and legal loss arising from such incident.  The defendant also agreed not to use the Vehicle for illegal purposes, including smuggling, otherwise the defendant would be liable for all loss and damages suffered by the plaintiff.

4.  In or about August 2003, the defendant attempted to smuggle some goods from Hong Kong to the PRC, as evidenced by an inspection report by the PRC Customs dated 28 August 2003.  The defendant left the Vehicle unattended.  The Vehicle and the smuggled goods found thereon were later seized by the PRC Customs.  Thereafter the defendant failed to contact the plaintiff to carry out further orders for transporting goods.  The plaintiff claimed that by reason of the above matters, it suffered loss and damages. 

5.  Initially the proceedings were commenced in the Small Claims Tribunal.  On 2 March 2004 the learned Adjudicator ordered that the proceedings be transferred to the District Court.  After such transfer the defendant failed to file any Defence and interlocutory judgment for damages to be assessed was granted in favour of the plaintiff on 12 January 2005. 

6.  The defendant was absent at the hearing today. 

7.  On 11 August 2005, I gave directions to adjourn the hearing of the assessment of damages to today.  I directed that my order should be served.  I am informed by Miss Lam, counsel for the plaintiff, that my order was served on 6 September 2005 by ordinary post.  The plaintiff’s solicitors, through Miss Lam, gave an undertaking to the court to file an affidavit of service on or before 12 noon tomorrow, 17 November 2005. 

8.  The affirmation of the plaintiff’s solicitors process server, dated 15 November 2005, showed that the plaintiff’s list of documents and hearsay notice, the witness statement of Mr Leung Yee-choi, and the trial bundle, were served on the defendant by leaving at his last known address on 11 November 2005.  In doing so the plaintiff failed to comply with the time limit in my order, which requires the list of documents and witness statement to be filed and served on or before 10 October 2005.  Miss Lam applied for leave to file and serve such documents out of time.  I note that ever since the commencement of these proceedings in the District Court the defendant took no part in the proceedings.  In my view, there is no prejudice and I grant leave for the plaintiff as requested.  In the circumstances, the trial proceeded accordingly.

9.  The plaintiff called Mr Leung Yee-choi to give evidence.  He was the deputy in charge of the plaintiff’s operations.  He said that the Vehicle had a PRC registration number 粵ZFL17港 issued by the authorities in Guangdong， PRC.  At all material times the plaintiff was the registered owner of the Vehicle and the defendant was its driver pursuant to the Chinese Agreement.

10.  To enable its Hong Kong registered cross-border transportation vehicles, such as the Vehicle, to carry out the PRC leg of the cross-border transportation business, the plaintiff must register such vehicles with PRC transportation companies.  This was described as “入線” in the trade, for which the plaintiff had to pay a monthly fee for each vehicle known as “排頭費”. 

11.  To apply for “入線” or “租線”, the registered owner of a Hong Kong vehicle had to provide information on the vehicle and driver, including a “driver booklet” issued by the PRC Customs.  The cross-border transportation vehicle would require a PRC registration number, and its driver a valid re-entry permit.  If the vehicle was to be driven by another driver, the PRC transportation company had to apply to replace the original driver with the new driver, and show the original driver’s valid PRC licence, his “driver booklet” and his valid re-entry permit, for cancelling the original registration.

12.  Mr Leung said that since the smuggling incident, the plaintiff tried to locate the defendant but was unsuccessful.  The plaintiff had no knowledge of the goods seized by the PRC Customs.  The defendant failed to explain to the plaintiff about the smuggling incident, or to assist the plaintiff by:

(a)	explaining to the PRC Customs that the seized goods did not concern the plaintiff or its customers;
(b)	handling the procedures to apply for the return of the seized Vehicle; and
(c)	collecting the Vehicle and handling the procedures for resuming cross-border transportation.

13.  The plaintiff later learned from the PRC Customs that since no one came to collect the seized goods they were confiscated and the plaintiff could collect the Vehicle after completion of the relevant procedures.  In or about September 2003, the plaintiff instructed its solicitors to deal with the Vehicle impounded by the PRC Customs and to reinstate the Vehicle’s cross-border transportation operations.  The plaintiff incurred $4,875 in legal fees, and its solicitors issued a receipt dated 18 December 2003. 

14.  The plaintiff had to pay the monthly “排頭費” of $6,500 for the Vehicle to the PRC transportation company for a period of about three months.   The Vehicle was impounded by the PRC Customs from 28 August 2003 to 26 September 2003, and thereafter the Vehicle remained idle pending completion of the procedures to replace the defendant with a new driver.  Such procedures were only completed on or about 4 December 2003.  The plaintiff therefore claims for the sum of $19,500, which were supported by receipts dated 6 October, 6 November and 5 December 2003, as well as a confirmation dated 3 December 2003, all issued by Yearise Transport Limited.  Yearise Transport Limited was the Hong Kong agent of the PRC transportation company. 

15.  Further, the plaintiff had to pay $2,000 for cancelling the registration of the defendant and substituting a new driver for the Vehicle, as evidenced by a receipt by Yearise Transport Limited dated 22 December 2003. 

16.  The plaintiff also paid the PRC Customs a sum of $1,200 for the release of the impounded Vehicle, as evidenced by a receipt dated 26 September 2003.

17.  In respect of the loss of profits, the plaintiff had replaced its computer system in 2003 and lost a substantial part of its records.  However, it was able to retrieve the commission records of the defendant from June to 26 August 2003 which revealed that the defendant went on 63 transportation journeys during that period.  The Vehicle was normally used to transport goods to 皇村, 長安 and 雁田 of Dongguan City, and the profit from these three places was almost the same.  Using 長安 as an example, the plaintiff would charge its customer $1,900 for a transportation journey, as evidenced by an invoice from the plaintiff to its customer, Lite-On Technology Corporation, dated 9 July 2003.  After deducting overheads, i.e. the PRC road fee, miscellaneous fee of $180, driver’s commission of $560, fuel charges of $200 and administrative fee of $100, the profit for the plaintiff was about $860 per journey.  So the plaintiff’s profits for the period from June to 26 August 2003 in respect of the vehicle was $860 x 63 days = $54,180.  On such basis the daily profit was $54,180 ÷ 87 days = $623.  Since the Vehicle was impounded for 100 days, i.e. from 28 August 2003 to 4 December 2003, the plaintiff’s loss of profit was $623 x 100 days = $62,300. 

18.  On balance I accept the evidence of Mr Leung and find that the plaintiff suffered the following loss and damages in the total sum of $89,875 as result of the defendant’s breach of the Chinese Agreement:

(a)	the Vehicle’s “排頭費” for September to November 2003 in the sum of $19,500;
(b)	application for a replacement driver for the Vehicle in the sum of $2,000;
(c)	legal fees in the sum of $4,875;
(d)	fee for releasing the impounded Vehicle in the sum of $1,200; and
(e)	loss of profits for the period from 28 August to 4 December 2003 in the sum of $62,300.

19.  I therefore grant judgment in favour of the plaintiff in the sum of $89,875, together with interest thereon at the rate of 9.234 per cent per annum from 24 December 2003, i.e. the date when the plaintiff commenced proceedings in the Small Claims Tribunal for recovery of the loss and damages, to the date of judgment and thereafter at judgment rate until payment.

(Submission re costs)

20.  There is no reason why costs should not follow the event and I award costs for the assessment of damages in favour of the plaintiff against the defendant, to be taxed if not agreed.  Miss Lam asked for certificate for counsel.  In my view, this is a simple, straightforward case in which the involvement of counsel was unnecessary.  It is plain from the above judgment that there is no undue complication in the evidence in support of, or in the computation of the loss and damages claimed.  I decline to grant certificate for counsel.