WAI CHUN INCORPORATION LTD AND ANOTHER v. 羅民基

DCCJ 1980/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1980 OF 2012

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JUDGMENT

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INTRODUCTION

1.  The central questions of this case are whether the defendant, an employed driver, owed any common law duty of care to his employer (the 1^st plaintiff) and the owner of the cars (the 2^nd plaintiff) whose cars were driven by the defendant in the course of his employment; and whether the defendant is liable for the loss of the cars as a result of theft by third party. 

BACKGROUND FACTS

2.  The defendant was a driver employed by the 1^st plaintiff on 3 August 2010.  Two other drivers worked for the 1^st plaintiff at that time were 蔡禮賢 (“Choi”) and 莫松霖 (“Mok”).  Choi was the head of the drivers.

3.  The 1^st plaintiff has assigned each of the drivers to primarily drive a car.  The defendant was assigned to drive a Toyota 7-seater numbered NP 9233 (“the 1^st Car”).  Choi was assigned to primarily drive a Mercedes Benz numbered MX 2972 with a PRC driving permit (“the Benz”).  Mok was assigned to primarily drive a black Nissan 7-seater.

4.  There are two keys to the 1^st Car.  One of them was kept by the defendant who was the driver primarily driving the car.  The other one was kept by Choi, the head of the drivers, as a back-up key (後備匙). 

5.  When the defendant would be on leave or for other reasons could not drive the 1^st Car, the other drivers might be assigned to drive the 1^st Car.  If Mok was assigned to drive the 1^st Car, arrangement would be made for the passing on to him a key to the 1^st Car.

6.  Unknown to the 1^st plaintiff prior to the loss of the 1^st Car, the drivers put a plastic box in a discreet place in the car park.  Instead of passing the car key to the other driver in person, they put the key in the plastic box for collection by the other driver.  According to Choi, this arrangement was in place before he joined the 1^st plaintiff.

7.  The 1^st Car was initially purchased by the parent company of the plaintiffs at the price of HK$584,937.00.  The title of the 1^st Car was transferred to the 2^nd plaintiff on 18 January 2011 at the consideration of HK$325,695.06.

8.  On 5 March 2011, when Mok went to the car park to take the 1^st Car, he discovered that the 1^st Car was missing.  The closed circuits television records of the car park showed that the 1^st Car was driven away by a man with his face covered.  There was no sign of forced entry of the 1^st Car.  The GPS security system lost track of the 1^st Car.  The incident was reported to the police.  No charge was laid after the police investigation.

9.  郭慶華 (“Guo”) was the Chief Executive Officer of the 1^st plaintiff at that time until 20 June 2011.  After the loss of the 1^st Car, he conducted an internal investigation and interviewed Choi, Mok and the defendant.  His evidence in court was mainly based on what he was told by Choi, Mok and the defendant at the investigation and is hearsay.

10.  About a week after the 1^st Car was found missing, Choi and Mok resigned.

11.  The 1^st plaintiff tightened up the control and required written acknowledgment from the drivers when car keys were changed hands.

12.  On 23 March 2011, the 2^nd plaintiff purchased a Nissan 7-seater numbered PT 9932 (“the 2^nd Car”) at HK$620,571.00 in place of the 1^st Car. 

13.  Two other drivers, 陳寶昌 (“Chan”) and 高永濂 (“Ko”) were employed by the 1^st plaintiff. The defendant was promoted to be the head of the drivers.

14.  On 13 May 2012, the 2^nd Car was found missing by Ko when he went to the car park to get the car.  The incident was reported to the police.  As in the last occasion, no prosecution was lodged after the police investigation.

15.  The plaintiffs engaged solicitors to assist in the internal investigation and to take statements from the defendant.  The plaintiffs warned the defendant that they might institute civil claims against him.

16.  On 15 May 2012, the defendant offered to resign from the 1^st plaintiff.  He was told that he could not resign until after the police investigation was completed, and that legal proceedings would be instituted against him.

17.  A few days later, on 18 May 2012, the defendant located the 2^nd Car and informed the plaintiffs of the same.  The defendant drove the 2^nd Car back to the plaintiffs.

18.  On 5 July 2012, the plaintiffs installed a new security system and a new car key for the 2^nd Car which cost HK$5,895.20.

19.  The defendant ceased to be employed by the 1^st plaintiff on 21 May 2012.  From the defendant’s salary, the plaintiffs deducted HK$300.00, which was the maximum amount of compensation for damage to or loss of goods by an employee towards his employer pursuant to section 32(2) of the Employment Ordinance (Cap. 57).  Both parties accepted that if the defendant is held liable for any damages, the sum of HK$300.00 will operate as set-off against the damages.

20.  The plaintiffs said that when the defendant returned the properties to the 1^st plaintiff upon the termination of his employment, the defendant failed to return the driving permit (行駛證) of the Benz.  The plaintiffs therefore have to apply for a new driving permit that costs HK$4,074.30.

21.  The plaintiffs also contended that when the defendant was driving the Benz in the PRC during the course of his employment, he has violated traffic offences and the plaintiffs has paid a penalty in the sum of RMB1,900.00 to the PRC authorities.

THE PLAINTIFFS’ CLAIMS

22.  The plaintiffs claim against the defendant for breach of duties, alternatively, breach of his obligation as a bailee.  The amounts claimed were as follow:-

(1) the value of the 1^st Car in the sum of HK$325,695.06;

(2) the installation cost of a new security system and a new car key for the 2^nd Car in the sum of HK$5,895.20;

(3) the sum of HK$4,074.30 being the costs for the reapplication of the driving permit (行駛證) of the Benz;

(4) the sum of RMB1,900.00, being the sum paid to the PRC authorities as penalty for violation of traffic offences in Shenzhen when the defendant was driving the Benz in the course of his employment.

23.  It is accepted by both parties that the sums received by the 2^nd plaintiff from its motor vehicle insurers should not be included in the calculation of damages suffered by the plaintiffs, if any.

PRELIMINARY ISSUES

24.  At the beginning of the trial, the defendant applied for the striking out of certain parts of the pleadings.

25.  The plaintiffs sought leave to amend the Statement of Claim.  Some of the intended amendments related to the preliminary issues raised by the defendant and some did not.

26.  I will first deal with these preliminary issues. 

Plea of Previous Criminal Conviction

27.  Counsel for the defendant, Miss Wong submitted that the plea of the defendant’s previous criminal conviction in paragraph 16 of the Statement of Claim[1] and paragraph 3 of the Reply[2] are inadmissible and/or are liable to be struck out under Order 18 Rule 19 of the Rules of District Court as being scandalous, frivolous or vexatious, and/or may prejudice, embarrass or delay the fair trial of the action due to the lack of particulars.

28.  Miss Wong relied on section 62 of the Evidence Ordinance and Order 18 rule 7A of the Rules of District Court.  She argued that according to section 62 of the Evidence Ordinance, “conviction by Hong Kong court is only admissible if it is relevant to any issue in those proceedings”[3], the plaintiffs’ reference to a previous criminal conviction of theft was not relevant to the issue of the present proceedings, and in any event, particulars of the alleged conviction have not been pleaded and the reference to the conviction should be struck out.

29.  The pleas in paragraph 16 of the Statement of Claim and paragraph 3 of the Reply are basically that the defendant was not truthful when he told the 1^st plaintiff during the job interview that he did not have any past criminal conviction.  The plaintiffs confirmed that they are not relying on section 62 of the Evidence Ordinance. 

30.  Section 62 of the Evidence Ordinance provides that,

“(1) In any civil proceedings the fact that a person has been convicted of an offence by or before any court in Hong Kong shall, subject to subsection (3), be admissible in evidence for purpose of proving, where to do so is relevant to any issue in those proceedings, that he committed that offence, whether he was so convicted upon a plea of guilty or otherwise and whether or not he is a party to the civil proceedings; but no conviction other than a subsisting one shall be admissible in evidence by virtue of this section.

(2) In any civil proceedings in which by virtue of this section a person is proved to have been convicted of an offence by or before any court in Hong Kong –

(a) he shall be taken to have committed that offence, unless the contrary is proved; and

(b) without prejudice to the reception of any other admissible evidence for the purpose of identifying the facts on which the conviction was based, the contents of any document which is admissible as evidence of the conviction, and the contents of the information, complaint, indictment or charge on which the person in question was convicted, shall be admissible in evidence for that purpose.”

31.  Section 62 of the Evidence Ordinance does not limit the plea of a criminal conviction if such plea is admissible under the general rules of evidence for purpose other than in reliance of section 62.  The effect of pleading a criminal conviction in reliance of section 62 is the shifting of burden of proof.  It is deemed to have proved that the person who was convicted has committed the offence.  (See: Lam Yin Mee v Lau Wan & Ors [1985] 2 HKC 437). 

32.  Section 62 of the Evidence Ordinance does not operate in the present case, accordingly, the requirement under Order 18 rule 7A does not apply.

Plea of Malice

33.  Miss Wong criticized that the plea of malice（惡意行為）in paragraph 17 of the Statement of Claim[4] is lacking in particulars, and therefore this plea is liable to be struck out as it discloses no reasonable cause of action, and/or is scandalous, frivolous or vexatious.

34.  Counsel for the plaintiffs, Mr Hui argued that “惡意行為” means intentional tort.  The plaintiffs did not contend any case of malice on the part of the defendant. 

35.  I do not agree with Mr Hui. The term “惡意” does not merely mean intentional.  It connotes bad faith or malice. 

36.  This is, however, no longer a live issue as the plaintiffs applied to amend the Statement of Claim by deleting the words “及／或惡意行為” in paragraph 17.  The defendant has no objection to this amendment and I have so allowed.

Claim for RMB1,900.00 for penalty of violation of traffic regulations in Shenzhen not enforceable

37.  Miss Wong’s next criticism directed at the plaintiffs’ claim for the penalty paid as a result of the violation of traffic offences in Shenzhen, which was pleaded in paragraph 19 of the Statement of Claim[5] and prayer (5).

38.  Miss Wong submitted that Hong Kong court would not recognize or enforce a foreign penal law, and argued that the plaintiffs’ claim in paragraph 19 of the Statement of Claim is amenable to be struck out as it discloses no reasonable cause of action, and/or scandalous, frivolous or vexatious, and/or is otherwise an abuse of the process of the Court. 

39.  She relied on the commentary in the Hong Kong Civil Procedure 2015, Vol. 2, §E5/5/7 on the Mainland Judgments (Reciprocal Enforcement) Ordinance and Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679. The issue in Hung Fung was on enforcement of an award of double interest made by the PRC court.

40.  Mr Hui submitted that the plaintiffs are not directly enforcing any decision of the Shenzhen authorities or enforcing the relevant traffic offences in Hong Kong in order to impose the fine on the defendant.  The plaintiffs are seeking a compensation of their loss caused by the defendant’s negligence.  I agree with Mr Hui. The authorities cited do not assist the defendant. 

Amendments to the statement of claim

41.  At the hearing, I made an order on the plaintiffs’ application to amend the Statement of Claim and I now give the reasons.

42.  Generally speaking, amendments may be allowed at any stage of the proceedings on such terms as to costs or otherwise as may be just (Rules of District Court, Order 20 rule 5). The underlying purpose is to determine the real question in controversy between the parties or to correct any defect or error.  The parties shall make sure at the early stage of the proceedings that the pleadings are accurate and precise.  The court shall not allow the amendments unless it is of the opinion that the amendments are necessary either for disposing fairly of the cause or matter or for saving costs (Rules of District Court, Order 20 rule 8(1A)).  The amendments would not be allowed if prejudice or injury would be caused to the other side by the amendments, which cannot be properly compensated by costs.

43.  Apart from the deletion of the words “惡意行為” in paragraph 17 of the Statement of Claim as referred to above, the plaintiffs also applied for:-

(1) a withdrawal of the claims for legal costs and administration fees in the total sum of HK$80,000.00 (deletion of prayer (3));

(2) an insertion of the consideration in the sum of HK$325,695.06 paid by the 2^nd plaintiff for the 1^st Car, and limit the claim to this amount instead of the higher price of the 1^st Car in the sum of HK$584,937.00 when it was first purchased (amendments to paragraph 8);

(3) an insertion of paragraph 17A pleading that the loss of the 1^st Car was caused by conversion by the defendant;

(4) an insertion at the end of paragraph 19 a plea that the plaintiffs paid the penalty in the sum of RMB1,900.00 through middleman on 1 June 2012; and

(5) an insertion of paragraph 19A stating that the loss of the plaintiffs was caused by the acts of the defendant by reasons of the matters pleaded in specified paragraphs.

44.  The amendments recited in sub-paragraphs (1), (2) and (5) above narrowed down the scope of some of the claims.  The defendant did not object to these amendments.  I allowed accordingly.  The defendant was given the opportunity to amend the defence in light of the above amendments to the Statement of Claim, which he had done so.

45.  The defendant objected to the amendments recited in sub-paragraphs (3) and (4) above.  The amendment to paragraph 17A (amendment (3)) adds a new cause of action, namely conversion.  The amendment to paragraph 19 (amendment (4)) introduces new fact which was not pleaded in the original pleadings.

46.  These amendments were made on the first day of the trial, which is a very late stage.  The defendant was not given time to respond to the new cause of action and the new fact pleaded. He would be prejudiced if these late amendments are allowed. The amendments, if allowed, would inevitably call for an adjournment of this trial, which was fixed for 4 days.  There is no reason provided by the plaintiffs as to why these amendments were not made earlier.  I disallowed these amendments.

47.  I now turn to the main dispute of the parties.

THE MAIN DISPUTE

48.  The key issues of this case are:-

(1) whether the defendant owed any duty of care towards the 1^st and/or the 2^nd plaintiff at common law;

(2) alternatively, as to the 1^st and 2^nd Cars, whether there was a bailment relationship between the defendant and the 2^nd plaintiff;

(3) if the defendant owed a common law duty of care to the 1^st and/or 2^nd plaintiff, whether the defendant was in breach of his duty, and the factual question in the present case is whether the defendant has lost the car keys;

(4) if there was a bailment relationship between the defendant and the 2^nd plaintiff, whether the defendant was in breach of his duty as a bailee;

(5) whether the defendant caused the loss and whether there was any intervening act which broke the chain of causation;

(6) if liability is established, what is the quantum of damages.

Duty of care owed by the defendant to the 1^st plaintiff

49.  An employee owes a duty to his employer in tort to take reasonable care in conducting his work and not to negligently cause damage to the employer. In most of the cases, the employee was also subject to express or implied contractual obligation to exercise reasonable care in the conduct of his work. 

50.  The employee’s duty towards his employer is well established. Lord Wright in Century Insurance Co Ltd v Northern Ireland Transport Board [1942] AC 509 said at page 519:-

“The duty of the workman to his employer is so to conduct himself in doing his work as not negligently to cause damage either to the employer himself or his property or to third persons or their property and thus to impose the same liability on the employer as if he had been doing the work himself and committed the negligent act. This may seem too obvious as a matter of common sense to require either argument or authority.”

51.  The employment contract between the 1^st plaintiff and the defendant dated 2 August 2010 contained the express provisions that the defendant was under the duties to, “manage the cleansing and maintenance duties of the car”, and that “driver should be energetic and alert at all times to ensure safety”.

52.  The job responsibilities of the defendant included driving the car safely, exercising care so as not to cause damage to the cars, keeping safe custody of the car keys, locking the car doors and windows securely and not to violate traffic regulations.

53.  The defendant, as an employee, owed a duty to the 1^st plaintiff, his employer, to keep, manage and use the 1^st and 2^nd Cars so as not to negligently causing damage or loss of properties to the 1^st plaintiff.  The existence of this duty of care is not disputed.

Duty of care owed by the defendant to the 2^nd plaintiff

54.  The 2^nd plaintiff is a company related to the 1^st plaintiff.  There was no direct relationship between the 2^nd plaintiff and the defendant.  It was the arrangement between the plaintiffs that the 1^st and 2^nd Cars were made available for the use of the 1^st plaintiff.  The 1^st plaintiff gave the car keys to the defendant and assigned the defendant to drive the 1^st and 2^nd Cars during his employment.

55.  The starting point in considering whether the defendant owed any duty of care to the 2^nd plaintiff in this case is the “neighbourhood” principle in Donoghue v Stevenson [1932] AC 562:-

“The liability for negligence, whether you style it such or treat it as in other systems as a species of “culpa”, is no doubt based upon a general sentiment of moral wrongdoing for which the offender must pay.  But acts or omissions which any moral code would censure cannot in a practical world be treated so as to give a right to every person injured by them to demand relief.  In this way rules of law arise which limit the range of complainants and the extent of their remedy. The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, Who is my neighbour? receives a restricted reply.  You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighhour. Who, then, in law is my neighbour?  The answer seem to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.”

56.  In Awad v Pillai [1983] RTR 266, the Court of Appeal applied the principle in Donoghue v Stevenson, and held that a person who was entrusted with a car by a repairer without knowledge of and authorization by the car owner owed a duty of care to the car owner for the loss and damage of the car caused by her negligence.

57.  Apart from Donoghue v Stevenson, important cases include Anns v Merton London Borough Council [1978] AC 728, Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 and Home Office v Dorset Yacht Co ltd [1970] AC 1004.  The factors considered and issues debated are the relationship of foreseeability and proximity and the relevance of policy consideration.  In Caparo Industries Ltd v Dickman [1990] 2 AC 605, the House of Lords summarized the position and held that:-

“What emerges is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterized by the law as one of ‘proximity’ or ‘neighbourhood’ and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other.”

58.  In Hong Kong, the Court of Final Appeal in Luen Hing Fat Coating & Finishing Factory Ltd v Waan Chuen Ming (2011) 14 HKCFAR 14 has held that the correct approach should be:-

“Ultimately it is necessary to stand back and take a holistic view of foreseeability, proximity and the need to be satisfied that it would be fair, just and reasonable to impose a duty of care.”

59.  The question whether it was fair, just and reasonable to impose a common law duty of care was not to be decided in the abstract.  It should be considered on the basis of what had been proved, but not on hypotheticals. (Barrett v Enfield London Borough Council [2001] 2 AC 550)

60.  Foreseeability, proximity and fairness are the factors that should be considered in determining whether a duty of care exists.  The consideration of these factors may overlap.  I adopt the approach held by the Court of Final Appeal in Luen Hing Fat.

61.  There was no real dispute on the issues of foreseeability and proximity. The defendant accepted that he has access to the 1^st and 2^nd Cars and possession of the car keys. It is foreseeable that his negligence in failing to keep safe custody of the car keys would cause damage to the car owner.  The defendant also accepted that the 2^nd plaintiff was the person closely affected by any negligent act of the defendant in regard to the cars.

62.  Miss Wong argued that the defendant was an employee, and was placed in a vulnerable position to carry out the duties using the equipment and vehicles provided by the employer, it would be unfair, unjust and unreasonable for an employee to incur unlimited liability in tort towards the owners of all property which the employee was given to use by the employer.  She referred to Marc Rich & Co v Bishop Rock Marine Co Ltd [1996] AC 211 and the remarks of Lord Denning in Morris v Ford Motor Co Ltd [1973] 1 QB 792 to support her contention.  She submitted that this is a matter of policy consideration.

63.  Miss Wong further submitted that the 2^nd plaintiff as the car owner, may claim the 1^st plaintiff for the loss.  It may also claim insurances.  She argued that it is unjust, unfair and unreasonable to impose on employees, who were in a vulnerable position, duties other than those duties towards their own employer.

64.  I do not consider it correct to generalize and take the position that as a matter of policy, it is unfair, unjust and unreasonable to impose a common law duty of care owed by an employee to the owner of property.  The mere fact that the car owner may have other people to sue would not by itself justify the absolving of liability of the employee if there is any.

65.  In Marc Rich, supra, the cargo owners sued the classification society for breach of a duty of care to take reasonable surveys and to make reasonable recommendations so as not to expose the cargo owners to risk of damage or loss.  The classification society was an independent and non-profit-making entity, created and operated for the sole purpose of promoting the safety of lives and ships at sea.  Marc Rich is a case in the context of shipping industry where there are established contractual structures, rules and practices governing the relationship and allocation of risks and liabilities between the parties involved.  One of the reasons given by the House of Lord in Marc Rich is that the imposition of a duty of care by the classification society to the cargo owner would upset the balance of international conventions governing shipowners’ liability towards cargo owners.  This consideration does not apply to the present case.

66.  A car owner is not mandatorily required to insure against the loss of his car including those caused by the negligence of the car user.  There is no evidence that it is a wide accepted practice of the car owners to take out such insurance.  I would hesitate to accept that because the property owner can take out insurance over the property, it would be unfair, unjust and unreasonable, as a matter of policy, to impose a duty of care on an employee towards the property owner for the use of the property.

67.  Miss Wong sought assistance from the following remarks of Lord Denning in Morris v Ford Motor, supra:-

“But, in point of fact, Fords would never, for a moment, have dreamt of suing their own servant Roberts. If they did so, all the men would have come out on strike. The men would say, with great force: ‘This sum should be paid by the insurance company, and not by Roberts himself.’ To make him pay personally for an accident at the works would be most unfair.” (at page 798C)

“It should not seek to make Roberts personally liable. Everyone knows that risks such as these are covered by insurance. So they should be, when a man is doing his employer’s work, with his employer’s plant and equipment, and happens to make a mistake. To make the servant personally liable would not only lead to a strike. It would be positively unjust.” (at page 801F)

68.  She fairly accepted that Morris is not a case on duty of care owed by an employee, but she relied on the remarks of Lord Denning and submitted that an employee was in a vulnerable position, therefore as a matter of policy, it would be unfair, unjust and unreasonable to impose duty on employees other than the duty towards their own employers.

69.  An employee might be in a vulnerable position in many situations.  However, this sentiment alone does not justify a ‘policy’ to the effect that a duty of care should not be imposed on an employee towards the owner of the property of which the employee was required to use in the course of employment.  This ‘policy’ was not supported by authorities.  The case of Morris does not negate the existence of a duty of care owed by an employee to a third party other than the employer.  The court shall consider all the facts and circumstances of the case and adopt a holistic approach in determining whether a duty of care exists. 

70.  The defendant was given the control and access to the 1^st and 2^nd Cars in the course of his employment.  He kept one of the car keys when he was at work and off duties.  It is reasonably foreseeable that if he loses the car key, the car owner may suffer loss and damage.  The suggestion that the loss should be recovered from the insurance company is a non-starter. A car owner is not mandatorily required to take out insurance to cover the risk of losing the car in such circumstances.  There is no evidence that this is a wide accepted practice. I do not consider the existence of a duty of care owed by the defendant to the car owner is unfair, unjust and unreasonable.  The defendant owed a duty of care to the 2^nd plaintiff.

Bailment

71.  As an alternative, Mr Hui contended that there was a constructive bailment relationship between the 2^nd plaintiff and the defendant.  Although I have ruled that the defendant owed a duty of care to the 2^nd plaintiff, I will deal with the arguments on this alternative claim.

72.  Mr Hui contended that the defendant was a sub-bailee of the two cars by taking possession of them, he has assumed the role of a special class of bailee and owed to the original bailor (the 2^nd plaintiff) all the common law duties that would traditionally arise upon a direct bailment of the kind in question.

73.  The existence of a bailment relationship requires a transfer of possession of the property and a voluntary acceptance of the common law duty of safekeeping.  Control over a property is dissociable from possession. (Palmer on Bailment, 3^rd edition, §23-001) One essential feature of a bailment relationship is the relinquishment of exclusive possession, control and dominion over the property by the bailor. (Palmer on Bailment, 3^rd edition, §5-001)

74.  The defendant has the key to the cars, and thereby has access and control over the cars.  The cars were parked in the car parks specified by the 1^st plaintiff.  Apart from the defendant, other people are also in possession of the other key to the same car.  The 2^nd plaintiff, being the owner of the cars, could make additional car keys.  There was no relinquishment of exclusive possession of the cars.  There was no bailment relationship between the plaintiffs and the defendant.

Breach of duty and causation

75.  The plaintiffs’ case is that the defendant has negligently lost or failed to keep the safe custody of the car keys, thereby caused the loss of the cars.

The 1^st car

76.  Guo, giving evidence for the plaintiffs, said that the defendant has admitted that he lost the key to the 1^st Car. There was no evidence of the circumstances under which the defendant gave the answer “是的” (in English “yes”), which the plaintiffs have taken as an admission.  I do not accept, without more, the defendant has “admitted” negligence as contended by the plaintiffs. 

77.  Guo’s evidence was basically his findings in the internal investigation and is hearsay.

78.  In Guo’s witness statement, he concluded that the defendant has stolen the 1^st Car. At court, he changed to say that the defendant was suspected to have stolen the 1^st Car.  He provided no good reason to explain why he made this change.

79.  In a statement given by Guo to the police officer on 9 May 2011, Guo referred to his investigation and stated that according to Mok, the defendant has given Mok a car key on 24 February 2011.

80.  During cross examination at trial, Guo changed again and said that it was incorrect to say that Mok have received a key from the defendant on 24 February 2011.  There was again no explanation on why he gave such evidence to the police officer in May 2011 in the first place.

81.  The contention that Mok has received a key from the defendant on 24 February 2011 does not sit well with Guo’s other evidence. If Mok has already received the car key on 24 February 2011, there was no reason why Choi has to put a key to the 1^st Car in the plastic box on 25 February 2011 for the collection by Mok.  Further, according to the evidence of both Choi and Guo, Mok kept the key until 28 February 2011.  That means both keys to the 1^st Car were with Mok until 28 February 2011.  Yet, according to Guo, the defendant has driven the 1^st Car on 27 February 2011.  If both keys were with Mok between 25 and 28 February 2011, the defendant would not have the 1^st Car Key to drive the 1^st Car on 27 February 2011.

82.  There are many inconsistences in the hearsay information gathered by Guo from the internal investigation. The evidence of Guo is not reliable and is not accepted.

83.  Turning to the evidence of Choi, he said in his witness statement that he has put a key to the 1^st Car in the plastic box on 25 February 2011.  He understood that Mok has taken the key on 25 February 2011 and has kept the same until 28 February 2011 when Mok passed it to the defendant in person.  The next incident Choi described in his witness statement was that at the night of 4 March 2011, he obtained a key from the defendant and passed it to Mok that night.  The next day, the 1^st Car was found missing.

84.  During cross examination, Choi said that on 4 March 2011 at about 6:30 pm, the defendant told him and Mok that the defendant has lost the 1^st Car key.  This was not mentioned at all in Choi’s witness statement.  When asked why he has not mentioned it in the witness statement, he simply said that he has missed it.

85.  The defendant’s admission in the presence of Choi and Mok that he has lost the 1^st Car key on the day before the missing of the 1^st Car is obviously very important.  It is unlikely that one would have missed it, in particular, when Choi has actually referred to the event on the same date at about 11:00 pm in the same witness statement.

86.  If the defendant has indeed said on 4 March 2011 that he lost the 1^st Car key, there is no good reason why Choi and Mok did not mention it in any of their statements.

87.  Further, the version of events given by Choi to the police officer in the statement on 5 March 2011 (the date when the 1^st Car was found missing) was different from his present version.  There, Choi told the police officer that at about 6:30 pm on 4 March 2011, the three of them, namely Choi, Mok and the defendant met in the car park and found that the back up key was lost. It was his evidence that the back up key was the key kept by him, not the one kept by the defendant.

88.  The defendant denied that he has lost the key.  When the theft was first reported to the police on 5 March 2011, he told the police officer that at about 6:30pm on 4 March 2011, Choi found that the key in the box was missing.  The defendant said that after further discussing with his colleagues, he was led to believe that he should have had possession of the key to the 1^st Car, but he was not or could not be sure about it. 

89.  I have considered all the evidence. On balance, the evidence does not support the plaintiffs’ contention that the defendant has lost the 1^st Car key. Insofar as the 1^st Car is concerned, the contention that the defendant was in breach of his duty of care was not established.

The 2^nd car

90.  The 2^nd Car was found lost on 13 May 2012.  At that time, Chan was primarily responsible for driving the 2^nd Car and has kept one of its keys. The defendant, who was by then promoted to be the head of drivers, kept the only other key to the 2^nd Car.

91.  陳冠宇 (“Chen”) was appointed a director of the 1^st and 2^nd plaintiffs after Guo ceased to be a director.  She gave evidence for the plaintiffs in regard to the loss of the 2^nd Car.  She has no direct knowledge of how the car key of the 2^nd Car was passed between the drivers on the days before 13 May 2012.  Similar to Guo, she relied on the information gathered from the interview with the drivers, namely the defendant, Ko and Chan, in the internal investigation. 

92.  The plaintiffs relied on the transcript of the interview with the defendant and the statements of the defendant during the internal investigation.  The plaintiffs criticized the credibility of the defendant and pointed out the inconsistences in the defendant’s statements given at the internal investigation.

93.  The interviews were conducted by the plaintiffs’ solicitors and a Mr Lam from the plaintiffs.  They have not given evidence in court on the circumstances under which the interviews were conducted.  

94.  The defendant said that he was under immense pressure during the interviews and the internal investigation.

95.  The plaintiffs also contended that it was very suspicious of the defendant that he found the 2^nd Car a few days later from a car park in Hunghom and it was likely that the defendant was involved in the missing of the 2^nd Car.  The defendant has given evidence to explain how he traced the 2^nd Car and eventually found it in the car park in Hunghom.  The plaintiffs have not challenged it other than saying that the defendant’s account was not credible. 

96.  The plaintiffs are not contending that the defendant has stolen the cars.  The mere fact that the defendant recovered the 2^nd Car after its loss could not be inferred to support the contention that the defendant was involved in the stealing or missing of the 2^nd Car.

97.  In court, the defendant testified that on 8 March 2012, Ko returned the key to the 2^nd Car to him in the drivers’ room by placing it on the defendant’s desk.  The defendant knew that Ko placed the key on his desk.  Since he was busy doing some work at that time, he has left his desk with the key on the table unattended.  The key was then found missing. 

98.  A few days later on 13 May 2012, the 2^nd Car was gone missing without any sign of forced entry. 

99.  The defendant must have known the importance of safe keeping the car keys after the loss of the 1^st Car. The 1st plaintiff has also highlighted the importance and imposed more stringent requirements in the passing on of the car keys between drivers.

100.  The defendant should not leave the car key unattended on his desk when Ko returned it to him on 8 May 2012.  That caused the loss of the car key and attributed to the loss of the 2^nd Car. I find that the defendant was in breach of his duty in respect of the loss of the 2^nd Car.

Nova Actus Interveniens

101.  The defendant submitted that there were unexpected intervening acts, namely the theft of 1^st and 2^nd Cars by third parties, which broke the chain of causation and the defendant should be relieved from the liability.

102.  Novus actus must constitute an event of such impact that it ‘obliterates’ the wrongdoing of the defendant. Criminal conduct does not always amount to a novus actus, in circumstances where it was foreseeable and where it was part of the defendant’s duty to prevent the intervention that occurred. (Clark & Lindsell on Torts, 21^st edition, §§2-104 & 2-105)

103.  The 1^st and 2^nd Cars were driven away from the car parks without any sign of forced entry.  The timing of the loss of the cars was close to the missing of the respective car keys.  On both occasions, the cars were driven away without alerting the security of the car park.  The inference was that the cars were driven away by someone possessing a valid car key and having access to the car park.

104.  If theft of the cars were the intervening act, such act was reasonably foreseeable as likely to follow upon the defendant’s negligent loss of the car key. 

105.  The defendant further said that the car keys could be duplicated in Hong Kong, the plaintiffs said otherwise.

106.  The type of the keys concerned is a remote control installed with a sim card produced by the car manufacturer.  According to Choi, such kind of car key could not be duplicated.  Additional key could only be obtained from the car manufacturer in Japan with car owner’s authorization. There is no other means to duplicate the car key.

107.  The defendant however asserted that there are places in Hong Kong providing services of duplicating this kind of car key.  He said that he learnt it from the advertisements in the car magazines but he has not produced any advertisement to substantiate his assertion. 

108.  I do not accept the defendant’s version.  In any event, I do not consider this version assists the defendant since even if the keys can be duplicated in Hong Kong, one needs to have the original key for the duplication. 

109.  The theft of the cars does not obliterate the defendant’s negligent conduct. 

The PRC driving permit

110.  The plaintiffs contended that the PRC driving permit was placed in the jewellery box in the Benz, which was primarily driven by the defendant.  He failed to return the PRC driving permit to the 1^st plaintiff when he left the employment. The defendant denied. 

111.  The plaintiffs claimed the sum of HK$4,074.30 under this item as the expenses for reapplication of the driving permit. The copy of receipt produced by the plaintiff only shown that a sum of RMB1,000.00 was paid for reapplication of driving permit and it did not state who paid the amount.

112.  Put aside the factual disputes.  The Benz is owned by Wai Chun Strategic Investments Limited, not the 1^st and 2^nd plaintiffs. Even if the driving permit was lost and has to be reapplied, such expenses are not the loss of the plaintiffs. The plaintiffs are not entitled to make this claim.

The penalty paid for the traffic offences in the PRC

113.  The penalty tickets issued by the Shenzhen authorities shown that the driver was a person named 陳科言, not the defendant.

114.  There is no documentary evidence supporting that the payment of penalty was made by the plaintiffs.  The contention that the defendant has violated traffic regulations was contradicted by the penalty tickets. 

115.  The plaintiffs are not entitled to make this claim.

Quantum

116.  I find in favour of the plaintiffs only on their claim in respect of the 2^nd Car. The amount claimed is HK$5,895.20 and this quantum is not in dispute. After setting off the sum of HK$300.00 paid by the defendant upon the termination of his employment, the defendant is liable to pay the plaintiffs the sum of HK$5,595.20.

CONCLUSION

117.  By reasons stated in the above, I order the defendant to pay the plaintiffs the sum of HK$5,595.20 with interest thereon at the judgment rate from the date of the writ until payment.  I made an order nisi that the costs of this action to be taxed if not agreed, with certificate for counsel.  This cost order nisi shall become absolute if no application to vary the same is made within 14 days from the date of this decision. 

118.  I thank both counsel for their assistance.