SANFIELD BUILDING CONTRACTORS LTD v. LI KAI CHEONG

FACV No. 16 of 2002

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 16 OF 2002 (CIVIL)

(ON APPEAL FROM CACV NO. 140 OF 2002)

_____________________

_____________________

_____________________

J U D G M E N T

_____________________

Chief Justice Li:

1. I agree with the judgment of Mr Justice Bokhary PJ.

Mr Justice Bokhary PJ:

2. The expression res ipsa loquitur (the thing speaks for itself) features prominently in the judgments of the courts below in this case. It is an expression that some lawyers (prominent among them Hobhouse LJ (as he then was) in Ratcliffe v. Plymouth & Torbay Health Authority [1998] PIQR P170) prefer to avoid. But some lawyers still find it convenient. For my own part, I think that using it is convenient sometimes. The important thing to remember ? and make clear ? is that the expression does not denote a doctrine but merely "a mode of inferential reasoning". The words which I have put within quotation marks are those used by Gleeson CJ and McHugh J in their joint judgment in a recent decision of the High Court of Australia, Schellenberg v. Tunnel Holdings Pty Ltd (2000) 200 CLR 121 at p.141.

3. This mode of inferential reasoning applies only to accidents of unknown cause. But it matters not that the immediate cause of an accident (eg. brake failure or a burst tyre) is known. As long as the cause on which the issue of liability actually turns (eg. why the brakes failed or the tyre burst) is unknown, the accident is regarded as one of unknown cause. The res ipsa loquitur mode of inferential reasoning comes into play where an accident of unknown cause is one that would not normally happen without negligence on the part of the defendant in control of the object or activity which injured the plaintiff or damaged his property. In such a situation the court is able to infer negligence on the defendant's part unless he offers an acceptable explanation consistent with his having taken reasonable care. The "essence" of this was identified by Lord Radcliffe in Barkway v. South Wales Transport Co. Ltd [1950] 1 All ER 392 at p.403G. It is, his Lordship said, that "an event which in the ordinary course of things is more likely than not to have been caused by negligence is by itself evidence of negligence".

4. None of this is to be analysed as putting an onus on the defendant to disprove negligence. In the famous case of the falling bags of sugar, Scott v. London and St Katherine Docks Co. (1865) 3 H & C 596 at p.601; 159 ER 665 at p.667, Erle CJ, giving the judgment of the majority in the Court of Exchequer Chamber, said that:

"... where the thing is shewn to be under the management of the defendant or his servants, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care." (Emphasis supplied)

5. The accident out of which the present case arose occurred on 11 November 1997 at a construction site in Kowloon. At that time the now well known building complex called Festival Walk was under construction there. The appellant company was the principal contractor for that building project. And the respondent, who was injured in the accident, was the man to whom the making of metal window frames for the project had been sub-sub-sub-subcontracted. But he was not engaged in that sub-sub-sub-subcontract work at the time of the accident. The project had not yet reached the stage when he was to commence that work. And while he was waiting for that stage to be reached, he worked at the site as a general worker in the employ of the sub-sub-subcontractor. It was while he was working in that capacity that he met with his accident.

Circumstances of the accident

6. Shortly stated, the circumstances of the accident, as far as they are known, were these. The top of a 3.8 metre high movable scaffold had become entangled with wiring dangling from the ceiling. The respondent climbed up the scaffold in order to free it from the wiring. While he was on the scaffold, it toppled over the edge of a light well and fell some 15 metres from Level 3 to Level 1. The respondent, too, fell from Level 3 to Level 1. As a result he was severely injured.

7. The respondent sued the sub-sub-subcontractor, the sub-subcontractor, the subcontractor and the principal contractor i.e. the appellant. He, as the plaintiff, named them as the 1st to 4th defendants respectively. The trial judge (Deputy High Court Judge Muttrie) absolved the sub-sub-subcontractor and the sub-subcontractor from liability. But he found the subcontractor (who had provided the scaffold) and the appellant jointly and severally liable to the respondent for damages agreed at $2.7 million. He awarded the appellant an indemnity against the subcontractor. But having regard to the subcontractor's financial circumstances, this indemnity would seem to be of little or no value. One of the orders which the trial judge made as to costs is an order that the appellant indemnify the respondent in respect of the costs which he ordered the respondent to pay the sub-sub-subcontractor.

Decision of the trial judge

8. To follow why the trial judge decided as he did, it is useful to begin by looking at certain paragraphs of his judgment. These paragraphs (in which the respondent is referred to as the plaintiff, the subcontractor is referred to as the 3rd defendant and the appellant is referred to as the 4th defendant) read:

"34. Here the accident could not have happened without negligence; scaffolds do not normally topple when a man climbs them, unless there is something unstable about them and an unstable scaffold amounts to unsafe equipment and an unsafe system and/or place of work. The scaffold was under the management and control of the defendants; to what extent I will explore later. There is no evidence as to what made the scaffold topple. So doctrine of res ipsa loquitur must apply here.

...

40. There is, it seems, no other possible inference from the facts but that there was some defect in the scaffold. There is no doubt that the 3rd defendant, being the contractor responsible for the scaffold, is liable for breach of statutory duties in respect of the scaffold under [reg. 38D of the Construction Sites (Safety) Regulations, Cap. 59]. The 4th defendant does not dispute that it is also liable as the contractor responsible for the construction site but claims to be indemnified by the 3rd defendant under the sub-contract for its share of any damages awarded.

41. There is further no doubt that both the 3rd and 4th defendants were the occupiers of the building site, and the plaintiff a visitor thereto for the purposes of [the Occupiers Liability Ordinance, Cap. 314]. The 3rd defendant was in occupation of the scaffold for it was its foreman, Mr Lee who had told the plaintiff to use it.

42. The 3rd and 4th defendants cannot escape liability for this accident. However by the terms of the contract between them the 4th defendant is entitled to indemnity from the 3rd defendant.

...

45. ... The only explanation for the accident is that there was some latent defect in the scaffold. ..."

9. It will be observed that four bases of liability are touched upon in the paragraphs of the trial judge's judgment quoted above. They are (i) negligence of the classic kind, (ii) breach of employers' duty of care, (iii) breach of statutory duty and (iv) occupiers' liability. The second basis could not be relevant to the appellant's position since it was not the respondent's employer. But the other three bases could be relevant to the appellant's position.

10. At the trial the appellant called its safety officer. He was the only defence witness called. His evidence only went to show that scaffolds of this kind did not normally topple over. Apart from calling this witness, the appellant relied at the trial on a submission. This submission was that the respondent and his eye-witness ought not to be believed in their evidence that the scaffold was stationary with its castors locked. Something else, the submission continued, must have been going on. It was to be inferred, the submission concluded, that the scaffold was being moved with the respondent on top of it. But the trial judge accepted the respondent and his eye-witness's evidence, and rejected this submission of the appellant's.

Decision of the Court of Appeal

11. The appellant appealed to the Court of Appeal. On liability, it argued before the Court of Appeal, as it had argued before the trial judge, that the respondent and his eye-witness ought not to be believed in their evidence that the scaffold had been stationary with its castors locked. The Court of Appeal unanimously ? Rogers VP and Le Pichon JA expressly and Stone J impliedly ? rejected this argument. Still on the issue of liability, the appellant also advanced an argument on latent defect, which I will come to in a moment. On costs, the appellant argued that the trial judge had in any event erred in ordering it to indemnify the respondent in respect of the costs which he ordered the respondent to pay the sub-sub-subcontractor.

12. By a majority consisting of Rogers VP and Le Pichon JA, the Court of Appeal dismissed the appeal, both as to liability and as to costs. Dissenting on the issue of latent defect, Stone J favoured a new trial between the respondent and the appellant as to liability. In favouring a new trial rather than an outright dismissal of the respondent's claim against the appellant, Stone J was influenced by the decision of the Court of Appeal in England in Lloyde v. West Midlands Gas Co. [1971] 1 WLR 749 and that of our Court of Appeal in Kaner v. Jerwood [1986] HKLR 571. As to costs, Stone J said that if he had been against the appellant on liability, then he would not have favoured allowing the discrete costs appeal on its own. So the Court of Appeal was unanimously against the costs appeal as a discrete appeal.

13. The trial judge's use of the term "latent defect" loomed large in the argument before the Court of Appeal. In that regard, Stone J ? who felt unable to share Rogers VP and Le Pichon JA's view that the trial judge's conclusion on liability ought to be upheld ? said this:

" In light of his finding as to 'latent defect', it is not easy to see how the learned judge has felt able to decide that liability should be attributed to [the appellant] for breach of statutory duty under Regulation 38D of the Construction Sites (Safety) Regulations (which refers to patent defects) and also under the Occupiers Liability Ordinance (which mandates the use of reasonable care in all the circumstances); somewhat curiously, and notwithstanding the apparent invocation of 'res ipsa loquitur', he has not expressly grounded liability in negligence."

The appellant's arguments on liability in this Court

14. In this Court the appellant advanced two discrete arguments on liability and continued to pursue its discrete appeal on costs. As to liability, the appellant's stance is that either the respondent's claim against it should be dismissed outright or, at least, that there should be a new trial of that claim as Stone J favoured.

15. The appellant's arguments on liability are stated thus in its printed case:

"In the foregoing circumstances it is submitted that the Court of Appeal should have allowed the appeal and given judgment in favour of the Appellant. Such judgment should have been either on the basis that the judge's finding of latent defect precluded any liability being imposed upon the Appellant or, alternatively, on the basis that the trial judge should have rejected the inherently unreliable evidence of the Respondent and [his eye-witness], held that there was no cogent evidence of how the accident had occurred and found that the Respondent had therefore not proved his case."

It will be observed that neither of those arguments involve any challenge to the trial judge's finding, which the Court of Appeal left undisturbed, that the appellant was, together with the other defendants, in control of the scaffold.

Concurrent findings of fact

16. The first of the appellant's two discrete arguments on liability can be disposed of very briefly. It is a repetition of the submission, rejected by the trial judge and the Court of Appeal, that the respondent and his eye-witness ought not to be believed in their evidence that the scaffold was stationary with its castors locked, and that something else must have been going on, such as that the scaffold was being moved with the respondent on top of it. So it has now become an attack on concurrent findings of fact. As we said in Sky Heart Ltd v. Lee Hysan Co. Ltd (1997-98) 1 HKCFAR 318 and have often repeated since, special circumstances have to be shown before we will review concurrent findings of fact. Quite simply, the appellant has failed to show any special circumstances.

17. This brings me to the other argument on liability contained in the appellant's printed case. It is that Stone J's minority view on the issue of latent defect is right while Rogers VP and Le Pichon JA's majority view thereon is wrong. What did the trial judge mean when he used the term "latent defect" in para. 45 of his judgment? Rogers VP took the view that the trial judge "was referring to a defect which had been unidentified but which he inferred must have existed in the scaffold". This view was shared by Le Pichon JA. But it was not shared by Stone J. In addition to what I have already quoted from his judgment, Stone J said that he was "unpersuaded that the term 'latent defect' requires semantic massage or that it should be understood at other than face-value".

Inferential reasoning of the res ipsa loquitur mode

18. In the present case Rogers VP said that "where a defendant relies on there being a latent defect, he has to prove that he was not negligent". I understand the learned Vice President to be saying no more than that a defendant who alleges a latent defect has the onus of proving it ? which is certainly so. But I would not consider it fatal to the learned Vice President's decision even if he is to be understood as saying that the res ipsa loquitur mode of inferential reasoning puts the onus on the defendant to disprove negligence. As the editors of Charlesworth & Percy on Negligence, 10th ed. (2001) say at p.361, para. 5-107: "In practice, the difference between neutralising the effect of the prima facie case and disproving negligence may be so small as to be immaterial". I do not think that the result of the present case turns on any such difference.

19. As we have seen, Stone J observed that the trial judge "has not expressly grounded liability in negligence". (Emphasis supplied). But in para. 36 of his judgment the trial judge noted that the respondent's claim was "based on negligence [, breach of statutory duty and occupiers' liability]." And, as we have seen, he said in para. 34 of his judgment that "the accident could not have happened without negligence". I think that negligence is in truth an explicit basis on which he grounded liability, but that it would be sufficient even if it were only an implicit basis on which he did so. And I think that in the circumstances of the present case the basis on which the appellant would be liable, if it is liable, is negligence.

20. It is therefore unnecessary to decide what room (if any) there is for res ipsa loquitur reasoning to operate in regard to breach of statutory duty or occupiers' liability. But I should guard against giving the impression that I have concluded that there is never any such room. Depending on the nature of the duty concerned, I think that there may be room for such reasoning to operate in regard to breach of statutory duty. And as far as occupiers' liability is concerned, it is to be observed that the editors of Clerk & Lindsell on Torts, 18th ed. (2000) suggest at p.574, para. 10-28 that in "a suitable case ... res ipsa loquitur may apply to occupiers' liability". They cite the decision of the Outer House in M'Dyer v. Celtic Football and Athletic Co. Ltd 1999 SLT 1. In that case the Lord Ordinary, Lord Macfadyen said (obiter) at p.7 that he was "not persuaded that ... res ipsa loquitur cannot be invoked in an occupiers' liability case concerning the management of property".

Latent defect

21. I turn now to the position of a defendant against whom the operation of res ipsa loquitur reasoning raises an inference of negligence in the absence of an acceptable explanation consistent with reasonable care on his part. In this connection, I concentrate (although not to the extent of ignoring all else) on the position when he offers an explanation of latent defect. I begin by referring to another Scottish case, this one decided by the Inner House. In John Marshall & Son v. Russian Oil Products Ltd 1938 SC 773 at p.791 the Lord Justice-Clerk, Lord Aitchison said:

" Notwithstanding the assumed logical difficulty of saying that an accident is unavoidable where the cause of it cannot be ascertained, it is, in my opinion, too absolute a proposition to say that, where the cause is unascertained, the prima facie inference of negligence cannot be displaced. There may be cases in which the inference of a latent defect is so strong and certain that it may amount to a good defence, even though the defender fails to point out the exact nature of the defect. If the cause is ascertained and is proved to be latent, negligence is excluded, but where the cause is not ascertained the difficulty of excluding negligence is proportionately increased, and the defender may fail because he cannot give any account of the occurrence sufficient to exclude negligence."

22. Before saying that, the Lord Justice-Clerk had considered the decision of the Court of Appeal in England in The Merchant Prince [1892] P 179, where the defence raised was inevitable accident. There Lord Esher MR said (at p.188) "If he cannot tell you what the cause is, how can he tell you that cause was one the result of which he could not avoid?", and Fry and Lopes LJJ said much the same thing. But all that the Lord Justice-Clerk really said is that there may be cases where the defence could be made out without establishing "the exact nature of the defect" (Emphasis supplied) I do not think that the John Marshall case (relied upon by the appellant) and The Merchant Prince (relied upon by the respondent) are necessarily irreconcilable. But even if they were, the result of the present appeal would not turn on a choice between them.

23. In Swan v. Salisbury Construction Co Ltd [1966] 1 WLR 204 a crane collapsed. Delivering the advice of the Privy Council, Lord Morris of Borth-y-Gest said (at p.210H): "As cranes ought not to collapse it was essential for [the defendants] to explain why the collapse occurred ... if they were to absolve themselves from those indications of negligence which could arise from the very fact of the occurrence itself". In the result, the Privy Council affirmed the decision of the trial judge in that case that the defendants were not to blame. This was because he had found, justifiably on the strength of evidence led by the defendants, as follows. The crane had collapsed because the ground had given way under it. But the precautions which the defendants had taken against the ground giving way under the crane were all the precautions which they could reasonably be expected to take.

24. Pearce v. Round Oak Steel Works Ltd [1969] 1 WLR 595, a decision of the Court of Appeal in England, involved a piece of machinery which fell on to the plaintiff employee's toe when the bolt holding that piece of machinery broke. The employee succeeded at first instance, and the defendant employer's appeal failed. Giving the leading judgment, Lord Denning MR said (at p.596G-H) that it was not enough for the employer to point to metal fatigue, and that he had to show that "in acquiring the machine and his dealings with it he took all reasonable care to see that it was in good order and condition".

25. What does the expression "latent defect" really encompass? It is necessary to answer this question in order to see who ? Rogers VP and Le Pichon JA or Stone J? ? correctly understood what the trial judge really meant when he used the expression "latent defect" in para. 45 of his judgment.

26. In its full sense the expression "latent defect" is used to indicate a defect that had not been discovered and was not discoverable by the exercise of reasonable care. So if its existence and the fact that it caused the accident is proved by the defendant, such a defect would by definition be a defence to a claim based on the accident having been caused by a lack of reasonable care on the defendant's part. It is possible to refer to such a defect without using the word "latent" at all. One could use instead a phrase of the kind which I used in the opening sentence of this paragraph, namely "a defect that had not been discovered and was not discoverable by the exercise of reasonable care". Frequently ? for the sake of brevity no doubt ? the expression "latent defect" is used without more. But sometimes people add something to the expression. For example, Lord Donovan did so in Henderson v. Henry E. Jenkins & Sons [1970] AC 282 at p.298 when he spoke of "a latent defect which was not discoverable by any reasonable care".

27. In para. 40 of his judgment as we have seen, the trial judge used the word "defect" without adding the word "latent". Linguistically this tends to support Rogers VP and le Pichon JA's understanding of his meaning. On the other hand, in para. 45 of his judgment as we have also seen, he used the expression "latent defect". Linguistically this tends to support Stone J's understanding of his meaning. Of course it would not have made any sense for the trial judge to find the appellant liable as he did if he regarded the defect as not reasonably discoverable. This tends to support Rogers VP and Le Pichon JA's understanding of his meaning. Moreover it tends to do so upon a substantive rather than merely linguistic basis. Then there is the trial judge's finding in para. 44 of his judgment that "the defect was not discoverable by [the sub-sub-subcontractor] by reasonable inspection, nor was [he] put on notice of inquiry as to defects". I do not think that this finding in favour of another party assists the appellant. If anything, it presents the appellant with the difficulty of not having a similar finding in its favour.

More than one person in control

28. Thus far I have been discussing the law in the simple context of the object or activity that did the damage being under the control of one person. But the present case has proceeded on the basis that such object, namely the scaffold, was under the control of all the defendants, including the appellant. In my view, the fact that the object or activity involved in an accident was under the control of more than one person does not preclude the operation of res ipsa loquitur reasoning. Suppose the cause of an accident is unknown but the circumstances support an inference of lack of reasonable care in regard to the control of the object or activity which caused the damage. That would point to a lack of reasonable care on the part of any person ? and, if more than one, every person ? in control of that object or activity. For the logic of the inference would necessarily be that reasonable care on the part of the person ? or, if more than one, any person ? in control of the object or activity would have avoided the accident.

Conclusion on liability

29. It is true, I regret to say but feel bound in fairness to the appellant's counsel's able argument to recognise ? that the trial judge could have expressed himself far more clearly than he did. But at the end of the day, I think that one can safely work it out that his view of the present case comes ultimately to this. The nature of this accident and the circumstances as he found them were such as to point, in the absence of an acceptable explanation, to negligence on the part of the appellant. As to the cause of the accident, all that could be said is that it was probably some undetected defect. But precisely what that defect was is unknown. And it does not appear to have been a defect which could not have been discovered by the exercise of reasonable care. The appellant's suggestion that something foolhardy had been going on, such as the scaffold having been moved while the respondent was on top of it, failed on the evidence. So no acceptable explanation was forthcoming. And the appellant was to be found liable accordingly.

30. For the reasons which I have given, I think that Rogers VP and Le Pichon JA correctly understood how the trial judge really saw this case.

31. All that is left is the appellant's argument, raised in the course of the hearing although not mentioned in its printed case, that even if there had arisen against it an inference of negligence which it had failed to explain away on the basis of latent defect, it still had a defence in that (i) it was entitled to rely on the subcontractor to supply a safe scaffold and that (ii) it had itself employed a safety officer who exercised proper control. There are problems with this suggested defence, the most serious of which is that it had not been raised at the trial. And one cannot confidently rule out the possibility that the state of the evidence relevant to it would have been materially more favourable to the respondent if the argument had been raised at the trial. So the appellant cannot avail itself of this argument.

32. For the foregoing reasons, I think that the appeal as to liability must fail.

The discrete costs appeal

33. This brings me to the discrete costs appeal. As to this, the appellant's argument, as we have seen, is that the trial judge had in any event erred in ordering it to indemnify the respondent in respect of the costs which he ordered the respondent to pay the sub-sub-subcontractor. Such orders (which take their name from the case of Bullock v. London General Omnibus Co. [1907] 1 KB 264) are known as "Bullock orders".

34. Of the cases cited by the appellant on costs, the one most on point in the circumstances of the present case is Mulready v. JHW Bell Ltd [1953] 2 All ER 215. Delivering the judgment of the Court of Appeal in England in that case, Lord Goddard CJ said this (at p.219F): "It does not appear to us that [a Bullock order] is an appropriate order to make where a plaintiff is alleging perfectly independent causes of action against two defendants where the breaches of duty alleged are in no way connected the one with the other".

35. The cause of action relied upon against the sub-sub-subcontractor was breach of employers' duty of care. The causes of action relied upon against the appellant was negligence, breach of statutory duty and occupiers' liability. Each of these four causes of action, being the one against the sub-sub-subcontractor and the three against the appellant, rested on precisely the same complaint, namely the provision of an unsafe scaffold. So I think that it would be going too far to say that the cause of action relied upon against the sub-sub-subcontractor was in no way connected with the causes of action relied upon against the appellant.

36. In my view, it would not be appropriate to overturn the Court of Appeal's unanimous support for the Bullock order which the trial judge saw fit to make unless one can go so far as to say that there was no scope whatsoever for the trial judge to make such an order in all the circumstances of the present case. And in my view, one certainly cannot go so far as to say that. So I think that the discrete costs appeal, too, must fail.

Result

37. In the result, I would dismiss the appeal, both as to liability and as to costs. The parties accepted at the hearing that the costs of this appeal should follow the event. As to costs, I would order that the costs orders made below be left undisturbed; that the respondent be awarded the costs of this appeal against the appellant; and that there be legal aid taxation of the respondent's own costs here as well as in the courts below.

Mr Justice Chan PJ:

38. I agree with Mr Justice Bokhary PJ's judgment.

Mr Justice Clough NPJ:

39. I agree with Mr Justice Bokhary PJ's judgment.

Sir Anthony Mason NPJ:

40. I agree with Mr Justice Bokhary PJ's judgment.

Chief Justice Li:

41. The Court unanimously dismisses the appeal, leaves the costs orders made below undisturbed, awards the respondent the costs of this appeal against the appellant, and orders legal aid taxation of the respondent's own costs here as well as in the courts below.