LAM KONG SANG v. MOK SUNG KIT

DCCJ 3121/2016

[2018] HKDC 480

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3121 OF 2016

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JUDGMENT

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INTRODUCTION

1.  This is an action for breach of an alleged oral agreement.

2.  The background to the alleged oral agreement is a traffic accident on 4 August 2009 in which a public light bus collided with a private car at Tai Nan Street in Kowloon.  The plaintiff was the driver of the public light bus.  The defendant was its registered owner.  The private car was driven by a Mr Cecil Ng (“Ng”), who was the owner.

3.  The public light bus was covered by a third party risk motor insurance policy issued by Target Insurance Company Ltd (“Target”).  The plaintiff and the defendant each reported the accident to Target shortly afterwards.

4.  When the defendant renewed the insurance policy for the following year, he lost his no claim bonus and was charged an extra loading on his premium by reason of the accident.

5.  The plaintiff was charged with dangerous driving.  The trial took place at the Kowloon City Magistrates’ Court.  On 17 August 2010, just over one year after the accident, he was acquitted. 

6.  The plaintiff says that after he informed the defendant of his acquittal, the defendant requested him to withdraw the accident report to the insurer so that the defendant could have the no claim bonus reinstated and the extra loading cancelled for the current policy.  The defendant agreed that after the withdrawal of the report, he would be fully responsible for any claim arising out of the accident.  Based on that agreement, the plaintiff withdrew the report on 5 October 2010.  That is the alleged oral agreement, which forms the subject-matter of the present action.

7.  Subsequently, a civil claim was indeed taken out against the plaintiff by Ng claiming damages for negligence in respect of the accident.  The plaintiff says that the defendant did not honour the alleged oral agreement and took no step in handling Ng’s claim.  Left with no option, the plaintiff engaged his own lawyers to defend the claim.  The trial took place at the District Court in March 2013.  He was found to be negligent and judgment was entered against him in the sum of $85,750 with interest.  In addition, he was ordered to pay Ng’s costs which was later taxed at $310,589.  He also incurred his own legal costs in defending the claim.  The plaintiff had no means to pay the amounts due to Ng.  Hence in September 2014, he took out a loan from a finance company at an interest rate of 30% per year, which was reduced to 18% in the subsequent year.  The interest expenses amounted to $394,794.90 in total.

8.  In gist, the plaintiff’s case is that the defendant was in breach of the alleged oral agreement.  As a result, the plaintiff has suffered loss and now claims damages for $947,954.38.

9.  The defendant denies that the parties made the alleged oral agreement.  It was the plaintiff who requested that the accident report be withdrawn.  The defendant did not know about the civil claim brought by Ng until the plaintiff commenced the present proceedings.  But if the court finds in favour of the alleged oral agreement, the defendant’s fall-back position is, first, that the plaintiff had not informed him of the claim; and, second, that the plaintiff had failed to mitigate his loss.  If he had properly mitigated, he would only have suffered loss in the sum of the judgment sum in the civil claim, plus fixed costs.

10.  As would be apparent from the above introduction, the outcome of the action turns on, first, whose factual case the court should accept; and, secondly, if the plaintiff succeeds in establishing his factual case, whether he had acted reasonably to mitigate his loss and how much loss the defendant should be held liable for.

11.  At the trial, the plaintiff and the defendant testified.

FACTUAL BACKGROUND

12.  I set out below the background facts which are either common ground or not in any serious dispute.

13.  There was a rental agreement dated 24 March 2003 between the defendant and a Mr Lam Kang Lit (“Lam”) under which the latter hired the public light bus from the former at a daily rent of $1,050.

14.  The material terms included the following:-

(a)  The hirer shall hire the public light bus from the owner at a rent of $1,050 per day.

(b)  If the public light bus is involved in a traffic accident etc, the hirer must immediately notify the owner so that it can be reported to the insurance company.

(c)  If the hirer meets with a traffic accident, the excess for the third party insurance is $20,000.

(d)  If there is any damage to the public light bus during the hire period, the hirer shall be responsible to pay compensation, for amounts not less than $20,000.

(e)  The hirer shall pay a rental deposit of $15,000.  The contract shall be for two years and the deposit shall be repaid to the hirer 30 days after the expiry of the contract.

15.  The term set out in sub-paragraph (d) above was clarified at the trial.  Although on the face of the agreement, the amount of $20,000 appeared to represent the minimum amount for which the driver would be responsible, the defendant confirmed in his oral testimony that, generally speaking, the amount in fact represented the maximum amount.  In other words, the driver’s liability to pay compensation would normally be capped at that amount in case of damage to the public light bus.  The defendant elaborated that if the driver was financially well off, he would not have to hire a public light bus.  He mentioned that a vehicle would cost about $700,000 to $800,000.  He added that therefore he would normally claim from the driver at most a sum of $20,000, in case of damage to the public light bus.

16.  The defendant received a deposit of $15,000 from Lam.

17.  Lam was allowed by the defendant to “sub-let” the public light bus to other drivers.  Lam drove the day shift himself and he “sub-let” the public light bus to the plaintiff for the night shift from November 2008.  There was no written agreement signed between Lam and the plaintiff in respect of the sub-letting. The plaintiff paid a deposit of $10,000 to Lam.  Throughout the “sub-letting” and until shortly after the accident, the plaintiff and the defendant did not know each other.

18.  When the defendant renewed the motor insurance policy in respect of the public light bus in March 2009, the basic premium was $48,000 but the defendant was entitled to a no claim bonus in the form of a 30% discount, ie $14,400.  This policy covered the one-year period commencing from 31 May 2009, ie the year in which the accident happened.

19.  Under the policy, the third party property damage excess was $20,000.

20.  The accident happened on 4 August 2009.  The public light bus, Ng’s car and some public railings in Wong Chuk Street were damaged.  The plaintiff, through Lam, informed the defendant about the accident.  Both the plaintiff and the defendant made a report to Target shortly afterwards.

21.  At Target’s request, they signed a rental agreement in respect of the public light bus on or about 19 August 2009 but backdated it to 1 November 2008.  It is common ground, as confirmed by counsel in opening, that even though the rental agreement was signed in such circumstances, its terms are binding on the parties as regards the hire of the public light bus.

22.  The rental agreement between the plaintiff and the defendant is in substantially the same form as the earlier one between the defendant and Lam, save for some of the amounts inserted.  The daily rent payable by the plaintiff to the defendant was $450.  The maximum amount for damage (as explained above) was $2,000.  The deposit payable by the plaintiff to defendant was $10,000.

23.  While the reduction in the daily rent and the deposit is understandable, it was not known why the much smaller figure of $2,000 was provided for as the damage cap in the plaintiff’s rental agreement.  But, similarly, the defendant confirmed in his oral testimony that he considered himself bound by the $2,000 cap.  I shall have to return to this below.

24.  After the accident, the plaintiff paid a further deposit of $10,000 to the defendant, through Lam.  It is common ground that the plaintiff had paid a total sum of $20,000 to the defendant as deposit.

25.  As a result of the accident, when the defendant renewed the insurance policy in respect of the public light bus in April 2010, he was no longer entitled to the 30% no claim bonus.  He was also required to pay a 20% loading in addition to the basic premium of $55,000.  In other words, by reason of the accident, he incurred an expenditure of $27,500, ie $55,000 x (30% + 20%), upon renewing the policy.

26.  The plaintiff was tried for dangerous driving.  He was acquitted on 17 August 2010.  The magistrate also declined to convict the plaintiff on the alternative charge of careless driving.

27.  It is common ground that on 5 October 2010, the plaintiff and the defendant went to Target’s office together and withdrew the accident report.  At Target’s request, they signed a withdrawal notice.

28.  However, the parties have put forward different accounts of what was said on 5 October 2010, both before and after they submitted the withdrawal to Target.

THE PLAINTIFF’S CASE

29.  The plaintiff’s case is that the alleged oral agreement was reached between the parties before they withdrew the accident report.

30.  There is a dispute as to when the plaintiff informed the defendant of his acquittal for the first time.  The plaintiff says that he told the defendant shortly after his acquittal and the latter requested the court documents be sent to him when received.  In early October 2010, upon receipt of the court documents and at the request of the defendant, the plaintiff sent the documents to Target.

The alleged oral agreement

31.  It was the defendant who called the plaintiff on 5 October 2010 and he requested the plaintiff to withdraw the accident report so that Target would cancel the 20% loading and reinstate the 30% no claim bonus in respect of the policy for that year.  As a driver by profession, the plaintiff was aware that if the report was withdrawn, he would be personally liable for any civil claim arising out of the accident.  He therefore asked the defendant: “If there is a civil claim against me, then what?”.  To that, the defendant replied: “That’s ok. I’ll take care of it”.  This conversation is set out in Chinese in the plaintiff’s witness statement.  (The translation is mine.)  The defendant further said that the plaintiff should co-operate if he wished to continue to drive the public light bus.  That was how the alleged oral agreement was made.

32.  On the same day, the plaintiff and the defendant went to Target to withdraw the accident report.  A staff there warned them that if the report was withdrawn, Target would not be responsible for all future claims arising out of the accident.  At that time, the plaintiff told the staff that the defendant had agreed to solely bear any liability.  The defendant did not raise any objection then.

33.  The staff requested the plaintiff and the defendant to sign on a withdrawal notice addressed to Target.  The withdrawal notice was handwritten by the plaintiff, following the wording dictated by the staff.  It was to the effect that given the acquittal, he and the defendant would like to claim back the no claim bonus; and further, to confirm that either the driver or the owner would be responsible for any future civil claim.

34.  The plaintiff asked the staff why the withdrawal notice should state that either one of them would be responsible, rather than the defendant solely as agreed between them.  The staff explained that these were standard wordings required by Target.  At this juncture, the defendant promised the plaintiff once again that he would be fully responsible for any civil claim arising out of the accident.  Upon such assurance, the plaintiff signed on the withdrawal notice. And so did the defendant.

35.  As a result of the withdrawal, Target cancelled the 20% loading and reinstated the 30% no claim bonus with effect from 5 October 2010.  The defendant thus received a refund of about $18,000.

36.  It just happened that a few days after the withdrawal, the plaintiff received a demand letter dated 8 October 2010 from CMS Hong Kong Ltd (“CMS”), the loss adjuster appointed by the insurer of the private car driven by Ng in the accident.  In his witness statement, the plaintiff said that the letter made reference to Ng’s claim in the sum of $82,250.

37.  I should note here that the demand letter included in the trial bundles does not expressly refer to this sum but refers to some “previous letters” regarding the accident and states that legal action would be taken against the plaintiff to recover the insurer’s loss without further notice.  However, the discrepancy was not explored at all at the trial and no submission made and no issue taken on this by counsel.

38.  Pursuant to the alleged oral agreement, the plaintiff passed the demand letter to the defendant.  The latter said that he would look into it.

39.  It is convenient to note at this juncture that also included in the trial bundles are three demand letters issued by CMS to the defendant directly:-

(a)  The first in time was also dated 8 October 2010.  CMS stated that the accident was solely caused by the driver’s negligence and informed the defendant that the insurer’s claim was for $82,250 and urged him to pass the letter to his insurer immediately.

(b)  The second demand letter was dated 7 January 2010.  However, it is clear from its content that there was a typo in the date and it should have been dated 7 January 2011 as it expressly referred to “our previous letter of 8 October 2010” and stated that it had not received positive response from the defendant or his insurer.  There was some confusion in the defendant’s evidence under cross-examination as he seemed to think that this letter was the first one he received from CMS, apparently because of the date.  But he eventually accepted that this demand letter was a follow-up letter to the one dated 8 October 2010.

(c)  The third demand letter was dated 16 February 2011.  It was also a follow-up letter as CMS had still not heard from the defendant or his insurer.

I shall refer to these three letters as the “first”, “second” and “third demand letters” below.

The plaintiff’s claim for $20,000 at the Small Claims Tribunal

40.  It is common ground that the plaintiff paid a total sum of $20,000 to the defendant as deposit in respect of the public light bus.  After the withdrawal, it was the plaintiff’s belief that since Target would not be under any obligation to pay compensation in respect of the accident, it would not demand any excess from the defendant and hence the defendant should make a refund of the deposit to him.  However, the defendant refused to do so and said that the deposit should be used to cover the repair costs of the public light bus.

41.  Given the defendant’s refusal, on 31 January 2011, the plaintiff commenced a claim against the defendant at the Small Claims Tribunal under SCTC 4758/2011 for the return of the deposit of $20,000. 

42.  He set out his grounds in the form of claim filed in those proceedings as follows:-

“The insurance company has no obligation to pay compensation. The owner of the public light bus should return the deposit of $20,000 to the driver. I paid the deposit in November 2008. I had an accident on 4 August 2009 at 9:36 pm. I won the lawsuit on 17 August 2010.” (my translation)

43.  In his written submissions to the Small Claims Tribunal, the defendant claimed that he had suffered loss as a result of the accident, including repair costs of the public light bus in the sum of $18,800 and other losses such as towing charges and loss of rental while the vehicle was under repair.  Such losses exceeded the deposit of $20,000.  But according to the rental agreement between him and the plaintiff, the maximum liability of the driver was $20,000.  In the circumstances, he contended that the deposit of $20,000 had been fully applied towards his loss and that he would not pursue any claim against the driver either.

44.  The parties subsequently settled the Small Claims action.  The defendant paid the plaintiff a sum of $1,500.  It was a little more than the balance of the deposit after deducting the repair costs incurred, ie $1,200.  On 20 May 2011, the plaintiff discontinued the claim.

45.  A document in Chinese was prepared by the defendant (in typed format) and signed by the plaintiff regarding the settlement (the “Settlement Document”).  It was a very short document.  It first set out the action number and then read:

“現因林港生先生要求庭外和解，
亦要求1500元作為取消保險賠償。
比後各不追夠立紙唯據:”

“Since Mr Lam Kong Sang requested an out of court settlement and requested $1,500 for the cancellation of the insurance compensation, this document was created as evidence that neither party would have any claim.” (my translation)

46.  In his oral testimony, the plaintiff said that he only took a look at the action number, his own name and the amount to make sure they were correct and did not pay attention to the other words.  His understanding at that time was that the sum of $1,500 paid by the defendant was to settle the plaintiff’s claim for excess of $20,000 and it had nothing to do with the alleged oral agreement.

The defendant’s breach

47.  In the meantime, in around May 2011, the plaintiff received a demand letter from Simon CW Yung & Co, acting for Ng.  The plaintiff told the defendant about it and the defendant asked him to send it to him and he would liaise with the solicitors.  The plaintiff said that he was financially constrained and simply could not handle such claim.  The defendant told him not to worry and he would deal with it.  From then on, he would forward all documents relating to Ng’s claim to the defendant when received.

48.  On 15 June 2011, Ng commenced a civil action against the plaintiff under DCCJ 2243/2011 claiming damages in the sum of $85,750.  In gist, Ng claimed that when the plaintiff moved from a minor road (Tai Nan Street) to a major road (Wong Chuk Street), he drove negligently by failing to observe the “Stop” sign and give way to the traffic on the major road and driving too fast, thus causing his public light bus to ram into Ng’s car.  It was estimated that the market value of Ng’s car was $90,000 to $95,000 and the total repair costs would exceed $95,000.  Hence the loss suffered by Ng was the difference between the market value of the car less its scrap value plus some expenses.

49.  Once again, the plaintiff told the defendant about the claim.  The defendant asked for the court documents and the plaintiff sent them over.

50.  In parallel, earlier in May 2011, the plaintiff received a letter dated 28 April 2011 from the Department of Justice demanding a sum of $1,294.30 as repair costs of the railings which were damaged in the accident.  The plaintiff told the defendant about it and the defendant said he would settle it.  (The defendant in fact settled the sum by a cheque dated 3 May 2011.)

51.  Given that the plaintiff did not receive any further demand from the Department of Justice, the plaintiff believed at that time that the defendant would honour the alleged oral agreement.  Therefore, whenever the plaintiff received documents from Ng’s solicitors, he would inform the defendant and forward those documents to him, without paying too much attention to the content.  In the meantime, the plaintiff himself did not take any step to defend the civil claim.

52.  On 25 July 2011, Ng obtained interlocutory judgment against the plaintiff in default of notice of intention to defend.  Ng then proceeded with the assessment of damages.

53.  Since November 2011, the plaintiff had been unable to reach the defendant.  He had left many messages on the latter’s voicemail.  But there was no reply.

54.  The court documents in the civil action show that the defendant appeared in person at some call-over hearings for assessment of damages in December 2011 and January 2012.

55.  In April 2012, having received no response from the defendant, the plaintiff engaged Pauline Wong & Co to act for him in defending Ng’s claim.  Counsel was engaged.

56.  In his oral testimony, the plaintiff sought to clarify the circumstances which eventually prompted him to engage his own solicitors.  He said that at one point (but he was not able to pinpoint when) he received what appeared to be a court document, as it was stamped with a court seal and the document contained some dollar figures.  He realised that there might be something it and he therefore called Ng’s solicitors.  And they informed him that there was already a judgment.  Therefore he went to speak to a clerk at a law firm.

57.  Through his lawyers, the plaintiff took out an application to set aside the default judgment.  An affirmation in support of that application was disclosed in these proceedings.  I shall have to return to its content below and shall refer to it as the “2012 affirmation”.

58.  The hearing for the setting aside application took place on 27 June 2012.  After hearing counsel from both sides, the presiding master set aside the default judgment. The plaintiff was given leave to defend the claim.

59.  The trial of the action took place in March of the following year.  He was represented by the same firm of solicitors and counsel was briefed to conduct the trial on his behalf.  By judgment handed down on 19 March 2013, the court found for Ng and made an award of damages of $85,750, together with interest and costs. 

60.  In May 2013, a charging order absolute was made in respect of the judgment sum and interest against a property owned by the plaintiff.  It is a flat in Tin Shui Wai where he lives.  Then, in February 2014, another charging order absolute was made against the same property in respect of Ng’s taxed costs.

61.  On 5 May 2014, Ng commenced proceedings under DCMP 1125/2014 to enforce the charging orders by an order for sale of the property.

62.  In order to save the property, the plaintiff tried to apply for a loan from Wing Lung Bank and Bank of China by re-mortgaging the property.  But his applications were refused by both.  In the end, he had no alternative and, in September 2015, he borrowed a sum of $550,000 at a yearly interest rate of 30% from United Asia Finance Ltd, a licensed moneylender.  A loan agreement was signed.  The loan was applied to settle the sums owed to Ng under the civil claim and also Ng’s legal costs in the enforcement proceedings in the sum of $5,000.  In the following year, given his punctual repayment records, the yearly interest rate was reduced to 18%.  A new loan agreement was signed in October 2015.  Copies of the two loan agreements have been disclosed in these proceedings.  In total, the plaintiff has made interest payments amounting to $394,794.90.

63.  The plaintiff contends that by reason of the defendant failing to perform the alleged oral agreement, he has suffered loss as follows:-

Judgment sums and costs in the two sets of civil actions	$483,159.48
Legal costs incurred by the plaintiff himself	$70,000.00
Interest payments	$394,794.90
Total	$947,954.38

64.  I pause here to note that Mr Simon SM Yip, counsel for the defendant, confirmed in opening (and again in closing) that the defendant does not take issue with the figures themselves, including the calculation of the interest expenses.

THE DEFENDANT’S CASE

65.  The defendant’s account of events differs from the plaintiff’s mainly in the following areas:-

(a)  What was said on 5 October 2010, both before and after the parties withdrew the accident report?

(b)  What was discussed when the Small Claims action was settled in May 2011?

(c)  Did the plaintiff forward the documents received under Ng’s civil claim to the defendant?  When did the defendant first know about the civil claim?

66.  On the whole, the defendant’s position is that:-

(a)  There was no oral agreement, as alleged.  In fact, it was the plaintiff who made the request to withdraw the accident report so that the defendant could continue to enjoy the no claim bonus.

(b)  Alternatively, if the alleged oral agreement did exist, the defendant was not in breach since the plaintiff had failed to inform him of the civil claim at all. 

(c)  If liability is established, the defendant contends that the plaintiff had failed to mitigate his loss.  Had he done so, he would only have suffered the loss of $85,750, which is the amount of Ng’s claim, plus fixed costs.

67.  I should say at the outset that it is not an entirely easy and straightforward task to set out the defendant’s factual case in the main areas of dispute.  As fairly observed by Mr Damian Wong, counsel for the plaintiff, the evidence contained in the defendant’s witness statement on these areas is fairly brief. On the contrary, in his oral testimony, he was a lot more forthcoming on both what had taken place and his own thinking process at the relevant time.  He vastly expanded his evidence by making quite a number of new factual allegations whilst in the witness box.  However, the task of setting out these new allegations coherently has been made doubly difficult as he at times recounted different versions of the same events in the course of his oral evidence. I shall therefore have to spell out at some length how his case has evolved in the main areas of dispute.

68.  First, however, some background of the defendant.  In cross-examination, he confirmed that he has been an owner of public light bus since 1995 and that he owned a total of four public light buses in 2009, all for letting out.  The public light bus involved in the accident was one of the four.

The withdrawal on 5 October 2010

69.  The defendant’s evidence on how the parties came to withdraw the accident report is as follows.

70.  According to his witness statement, on 5 October 2010, the plaintiff suggested to the defendant to withdraw the accident report.  The purpose was to enable the defendant to continue to enjoy the no claim bonus.  The plaintiff also told the defendant that he had been acquitted of dangerous driving and no one could claim compensation against the plaintiff.  Even if there was a lawsuit, the claim would not be successful.  Acting on the plaintiff’s words, the defendant agreed to withdraw the accident report.

71.  That is all that was said about the conversation on 5 October 2010 in the defendant’s written evidence.  As fairly observed by Mr Wong, the defendant’s written evidence on the withdrawal of the accident report is “extremely brief”.  That should be contrasted with the new factual allegations put forward by the defendant at the trial, which concern the same subject-matter but are much fuller in detail. 

72.  Under cross-examination, the defendant said that on 3 October 2010, the plaintiff called him by phone telling him for the first time that he was acquitted.  The plaintiff then requested the defendant to withdraw the accident report.  He further claimed that since he had been acquitted, no one could sue him.

73.  The defendant said that he had been reluctant to withdraw the accident report.  He explained that he was busy, having to work every day, and also that he could not really be bothered to do it.  However, the plaintiff called him repeatedly urging him to make the withdrawal.  And he felt that he could no longer refuse.  Therefore the defendant agreed to go to Target’s office with the plaintiff on 5 October 2010.

74.  In his oral testimony, the defendant made several attempts to explain his thinking process at that time.  The explanations are not entirely consistent.  I shall point out the inconsistencies as I go through his new revelations at the trial.

75.  He said he agreed to withdraw the accident report after having considered three items: (a) the repair costs of the public light bus, (b) the repair costs of the railings damaged in the accident, and (c) the repair costs of Ng’s private car.  At that time, he already knew the amounts for items (a) and (b).  As to the former, he himself arranged for the repair of the public light bus and spent a sum of $18,800 on it.  As to the latter, he produced, for the first time in these proceedings, a letter dated 28 September 2009 from the Highways Department demanding a sum of $1,294.30 as repair costs of the railings.  (This is the same amount as subsequently demanded by the Department of Justice in the letter dated 28 April 2011.)

76.  As to item (c), the defendant had put forward three versions of his understanding at that time in cross-examination.

77.  The first version is as follows.  The defendant said it was the only item of which he did not know the amount at that time.  However, he had consulted a firm of loss adjusters, who told him that as there was no employment relationship between him and the plaintiff, Ng would have no claim against the defendant with respect to the accident.  He seemed to suggest that it was for that reason that although he did not know at that time the amount of any potential claim which might be brought by Ng, he went along with the plaintiff’s suggestion to withdraw the accident report.  He repeated the first version once later on.

78.  Some time later in his cross-examination, he put forward the second version.  In this version, the defendant changed his evidence on when he consulted the loss adjusters.  He said that when he withdrew the report, he had not yet received the first demand letter from CMS stating the claim amount of $82,250 (see para 39(a) above).  It was only after he received the third demand letter (ie the one dated 16 February 2011 from CMS) that he consulted the loss adjusters, Law’s.  In other words, he consulted Law’s some time after the withdrawal of the accident report.  He further clarified that in fact, it was only after he received the third demand letter that he went to speak to Law’s as he was worried about Ng’s claim.  He then explained that he agreed to withdraw on 5 October 2010 because he believed the plaintiff’s assertion that no one could successfully sue the plaintiff after his acquittal.  In fact, it was his own understanding that it would be very difficult to sue if there was no conviction.

79.  The second version differs from, and conflicts with, the first on when the defendant consulted Law’s.  Under the first version, he did so before the withdrawal and hence he knew that as owner he would not be liable to Ng for the accident.  On the contrary, under the second version, he made the consultation after the withdrawal.  This means that he did not have that understanding from Law’s at the time of the withdrawal.

80.  Later on in cross-examination, the third version emerged.  It was pointed out to the defendant that the withdrawal notice contained a statement that either the driver or the owner would be responsible for any future civil claim after the withdrawal.  He said that he was not worried about it.  He then added that he already knew at that time that Ng’s claim was about $80,000.  His answer was plainly startling as it flatly contradicted the first and second versions. He explained that by then he had received the demand letter from CMS dated 7 January 2010.  This, however, does not make sense as the letter was clearly misdated and was only sent in January 2011 – see para 39(b) above.  After some toing and froing, the defendant accepted that there was a typo in the date.  However, he added that there should be a few earlier demand letters but he was unable to produce these earlier letters from CMS.

81.  Naturally, counsel then asked him why if he had received these earlier demand letters from CMS, he would still hold the belief on 5 October 2010 that Ng would not bring any civil claim in respect of the accident.  The defendant replied that he had assumed that CMS had not been notified of the plaintiff’s acquittal.  He simply believed that CMS would not proceed with the claim.

82.  These are the three versions of the defendant’s belief or understanding in relation to Ng’s claim at the time of the withdrawal.

83.  And then, in cross-examination, the defendant was asked whether the plaintiff had made any request in return for the withdrawal of the accident report, eg the return of the deposit of $20,000.  The defendant answered that the plaintiff did not expressly request him to refund the deposit but he could sense that that was what the plaintiff wanted.  In his further reply, the defendant said that since the repair cost of the public light bus and other losses had already exceeded $20,000, there would not be any refund to the plaintiff after the withdrawal of the accident report.

84.  After they completed the withdrawal and when they were leaving Target’s office, the plaintiff immediately asked the defendant to return the deposit of $20,000.  The defendant refused on the spot.  The plaintiff then said “see you in court”. The defendant said in oral evidence that he had omitted to mention this in his witness statement.

85.  A few days later, on about 8 October 2010, the defendant received another demand letter from CMS.  He assumed that CMS would issue a similar letter to Target and that Target would inform CMS of the withdrawal and CMS would not follow up after being so informed.  Therefore, he ignored the demand letter from CMS.  He also did not take any action in respect of the second demand letter from CMS.

86.  In his witness statement, the defendant said that he has been a vehicle owner for many years and knows that if there is a traffic accident in which personal injuries or damage to other vehicles are caused, it is always possible that someone will make a claim for compensation and that is why he would put in place insurance cover, including third party risk insurance, in order to protect him from loss.  Based on that, he claims that there is absolutely no reason why he would enter the alleged oral agreement and why he would take up the liability for compensation in the absence of any insurance cover.  Further, he agreed to withdraw the accident report based on the plaintiff’s words that no claim for compensation would succeed in view of his acquittal.

The settlement of the Small Claims action

87.  I should first set out the defendant’s pleaded case.  In his defence, the defendant relied on the Settlement Document to put forward an alternative case, namely if the alleged oral agreement existed, it was compromised by the agreement contained in the Settlement Document.  The defendant’s case is pleaded as follows:-

“Pursuant to the said settlement agreement, the Defendant paid the Plaintiff a sum of $1,500 for full and final settlement for the disputes arising from the Accident and the withdrawal of report of the Accident to Target.”

88.  However, in closing, Mr Yip changed course and confirmed that the defendant would not rely on the Settlement Document to advance his alternative case, as pleaded.  Mr Yip said instead the defendant would rely on this incident to discredit the plaintiff.

89.  I should therefore turn to the defendant’s evidence.  According to the defendant’s witness statement, the plaintiff requested an out of court settlement and asked for $1,500 for his withdrawal of the accident report. 

90.  At the trial, he made further material allegations regarding the settlement negotiations.

91.  The defendant said according to his understanding, the plaintiff’s stance was that given the withdrawal of the accident report, the defendant could claim back the no claim bonus and therefore the plaintiff demanded the return of $20,000.  At the suggestion of the presiding officer who suggested parties to explore settlement, the plaintiff indicated to the defendant that since the plaintiff had done so many things (meaning he had commenced the Small Claims action), the defendant should pay something back as a gesture.  The defendant told the plaintiff that since the repair cost of the public light bus and other loss had already exceeded $20,000, the plaintiff was not entitled to any refund.  The plaintiff then asked for $1,500 and the defendant agreed to it. 

92.  I should pause here to observe that the above evidence does not sit well with the defendant’s acceptance that a $2,000 cap should generally apply to the driver’s liability for damage to the public light bus – see paras 15 and 23 above. 

The plaintiff did not forward the court documents to the defendant

93.  The defendant denies that the plaintiff had ever sent any document in relation to Ng’s claim to him or informed him of the claim.  Further, he said that he had had no knowledge of Ng’s claim until the commencement of the present proceedings. 

94.  On the defendant’s case, I should add, for completeness, that a defence of set off in relation to the repair costs and other expenses is pleaded.  However, Mr Yip confirmed at trial that the defendant would not pursue the set off.

FACTUAL FINDINGS

95.  The resolution of the factual disputes primarily turns on the credibility of the plaintiff and the defendant, who have given conflicting accounts of the same events.  My task is to evaluate the competing evidence against the backdrop of undisputed and indisputable facts.  I am to weigh the inherent probabilities of the parties’ cases.  Contemporaneous documents should be given due weight in the assessment exercise.  The internal consistency (or inconsistency) of the witnesses’ evidence should be taken into account.  The court would also be guided by its overall impression of the characters and motivations of the witnesses: see, eg, Re B (Children) [2009] 1 AC 11, para 31, per Baroness Hale, cited in Standard Chartered Bank v Li Wai Ping HCA 10587/2000 and HCA 3573/2003, 17 February 2011, para 19.

96.  What is most striking in this case are the glaring inconsistencies in the defendant’s oral evidence and the many new revelations which he made for the first time when giving oral testimony and which concerned the material issues in dispute.  This has seriously undermined the credibility and reliability of the defendant.  On the other hand, the plaintiff’s evidence is generally straightforward and consistent and his factual case accords well with inherent probabilities.  On the whole, I would prefer the plaintiff’s evidence to the defendant’s, where they are in conflict.

Inherent probabilities of the parties’ cases on the withdrawal

97.  The plaintiff’s account of how the alleged oral agreement was reached and the intention behind is inherently plausible and accords well with the surrounding circumstances.  On the face of it, as the driver involved in the accident, normally speaking, he would have no incentive to withdraw the accident report, in the absence of any promise by the defendant to take responsibility for any claim arising out of the accident.  By doing so, he would effectively be giving up the protection of the insurance coverage.  It should be recalled that by that time, he had already paid a sum of $20,000 to the defendant, thus covering the excess payment required under the policy.  In the circumstances, he would not need to worry about any claim from Ng as insurance coverage was in place.  If he was to give up the insurance coverage, it would only make sense that he had something in return, such as the defendant’s promise to bear responsibility.

98.  The defendant seeks to suggest that the plaintiff requested the withdrawal and his motive was to get back the sum of $20,000 from the defendant after the withdrawal.  However, even on the defendant’s factual case, the plaintiff did not expressly demand the sum of $20,000 before the withdrawal but only did so afterwards.  If the plaintiff’s motive was indeed to get back the money, common sense would suggest that he would make the demand before the withdrawal, ie when he still had bargaining power over the defendant.  Once the withdrawal was completed, the plaintiff’s request for the refund would be entirely at the mercy of the defendant. This does not make much sense.  The defendant’s case in this regard thus seems to be against the weight of inherent probabilities.

99.  On the other hand, the defendant would have more incentive to have the accident report withdrawn. This is because by doing so, he would have the no claim bonus reinstated and the loading cancelled for the current year.  He immediately received a refund of about $18,000 from Target as a result of the withdrawal.  He also accepted that he would continue to enjoy the no claim bonus for the few years to follow.  Hence he would reap tangible benefits from the withdrawal.

100.  At one point in his oral testimony, the defendant said that he did not care too much about the no claim bonus.  He claimed that many of his vehicles did not have no claim bonus anyway and that he did not expect to maintain no claim bonuses for his vehicles when running his business.  The veracity of this assertion ought to be judged against the undisputed factual background.  In the context of the defendant’s business, the sum of $18,000 was not an insignificant sum.  By way of illustration, he was charging a daily rent of about $1,100 at that time.  The saving of $18,000 was equivalent to about 16 days’ rent.  (It should also be borne in mind that he would continue to enjoy the no claim bonus in subsequent years.)  He was effectively saying that he did not care too much about half a month’s rental income.  While I would not dismiss what the defendant says as outright unbelievable, I consider his assertion to be, again, at odds with inherent probabilities.

101.  Furthermore, the defendant’s factual case on the withdrawal is premised on the factual propositions that, one, the plaintiff told him that because of his acquittal, the plaintiff could not be successfully sued and, two, the defendant believed this.  In my view, the factual propositions seem to be unlikely to be true, given the background of the defendant.  He was running a business of letting out public light buses and earning rental income.  One would expect him to have at least some basic knowledge about how these things work in real life.  Mr Wong submitted that the defendant has been trying to portray himself as a naïve and ignorant person who knows nothing about motor insurance when he is not. There is a lot of force in this submission.

102.  Accordingly, I consider that, on the whole, the plaintiff’s factual case on why there was a withdrawal is more in line with inherent probabilities than the defendant’s.

The plaintiff’s case is generally consistent

103.  The plaintiff’s evidence is generally consistent.  There is no material discrepancy between his oral evidence and his witness statement.  He remained firm in his evidence under cross-examination.  He gave the appearance of a credible and reliable witness.

104.  There are two main lines of attack raised by Mr Yip to challenge the plaintiff’s case.

105.  First, Mr Yip relies on the Settlement Document.  He submitted that the actual words used in this contemporaneous document are contradictory to the plaintiff’s case, as it expressly referred to the sum of $1,500 as consideration for the cancellation of the insurance compensation.  He also submitted that the plaintiff’s explanation (that he had not read the document in full) is incredible.

106.  The discrepancy between the wording in the Settlement Document and the plaintiff’s account of what the settlement was for is obviously a matter which I should take into account when I consider the overall credibility of the plaintiff.  But I should also take note of the plaintiff’s explanation, which is a plausible one.

107.  Secondly, Mr Yip places emphasis on the difference between the plaintiff’s 2012 affirmation and his witness statement filed in these proceedings.

108.  In the former, the plaintiff deposed that when the defendant requested him to withdraw the accident report, the following conversation took place.  The defendant said that in case there was any civil claim arising out of the accident, he would be fully responsible but that the plaintiff should assist him by testifying in court since the plaintiff was the driver in question.

109.  Mr Yip pointed out that the conversation described in the 2012 affirmation is different from that set out in the witness statement, which, he highlighted, was made in March 2017 – see para 31 above.  In particular, the plaintiff was able to give a verbatim account of the conversation in the 2017 witness statement but not in the 2012 affirmation.  Mr Yip further stressed that the conversation was set out in quotes in the 2017 witness statement.  He submitted that the plaintiff was not able to give a satisfactory answer in cross-examination on why there was such a discrepancy and, further, why he seemed to have a better recollection when he made the 2017 witness statement, given that he could recall the actual words used.  All these, he submitted, show that the plaintiff was not telling the truth.

110.  One cannot deny that the actual words used in the 2012 affirmation and the 2017 witness statement are different.  It is also legitimate for the defendant to raise the query why the plaintiff was able to have a word-for-word recollection of the 2010 conversation in 2017, but not in 2012, and why the two versions do not exactly match.  However, on the other hand, I consider that, objectively speaking, the substance of the evidence, whether as revealed in the 2012 affirmation or the 2017 witness statement, is essentially the same, namely that the defendant would be responsible for the civil claim arising from the accident.  On the whole, I am prepared to take the view that as such, there is no inconsistency in the plaintiff’s evidence in substance, notwithstanding the different drafting.  (Mr Wong also highlighted in his written submissions that the 2012 affirmation and the 2017 witness statement were prepared by two different firms of solicitors.)

111.  In addition to the two lines of attack mounted by Mr Yip, it should also be apparent from the above recount of the plaintiff’s case that his case is a little unclear in two areas.  First, the precise time at which he realised the need to find his own lawyers to deal with Ng’s claim.  The document which he referred to for the first time in his oral testimony (see para 56 above) does not seem to match any documents disclosed in these proceedings.  Second, one also wonders why he would make a claim for the full deposit of $20,000 in the Small Claims action, given that he must have been aware that the public light bus was damaged in the accident and that some repair costs would have been incurred.  However, these two points are not pursued or taken up at all in Mr Yip’s submission.  I therefore do not consider that too much weight should be given to them in the overall assessment exercise.

112.  On the whole, I find that the plaintiff’s case is generally consistent and, by comparison, is a lot more consistent than the defendant’s.  I should also add that in respect of the plaintiff’s case that he took out loans in order to settle the judgment sum and costs owed to Ng, his allegation is supported by contemporaneous documents. The interest rates charged by the lender are set out in the two loan agreements disclosed in these proceedings.

The defendant’s evidence is inconsistent and at times outright contradictory

113.  The same cannot be said of the defendant’s evidence.  As is apparent from my recount of the defendant’s case above, it is tainted with material and irreconcilable inconsistencies. The three versions of his thought process when he considered whether to withdraw the accident report would immediately be called to mind – see paras 76 to 82.  Faced with the three inconsistent versions, it was not surprising that in his closing submissions, Mr Yip had difficulty in stating the final position of the defendant as to whether he had in fact spoken to his loss adjuster prior to the withdrawal on 5 October 2010. 

114.  What is equally striking is the many new revelations made at the trial on the material issues in dispute.  Most notably, the defendant only sought to spell out in detail the circumstances in which the withdrawal was made by the parties on 5 October 2010 and his thought process at that time.  The crux of the dispute rests on why the parties agreed to withdraw the accident report.  The plaintiff’s case on this, as observed above, is straightforward, easy to understand, inherently plausible and consistent throughout the proceedings.  By contrast, the defendant’s case, up until the trial, has been very brief and does not fully explain the motives of the parties.  It is abundantly clear that the defendant was trying to fill those gaps when he made the new revelations at trial, in an attempt to explain why the plaintiff would initiate the request to withdraw the accident report when there did not seem to be any benefit to him in doing so.

115.  If the new factual allegations were indeed true, one cannot help but wonder why the defendant had not included them in his witness statement in the first place.  The last minute revelations cast significant doubt on the reliability of the defendant’s evidence as a whole. 

116.  In conclusion, on a balance of probabilities, I accept the plaintiff’s account of events as a truthful account.  Accordingly, I find that the oral agreement was reached, as alleged by the plaintiff, and that the defendant was in breach as he failed to follow up on Ng’s claim when notified by the plaintiff.  The plaintiff took the steps he alleges in defending the claim and satisfying the judgment sums and costs.  He has suffered loss in the sums alleged.

117.  I now turn to the final issue of mitigation.

MITIGATION

118.  The onus is on the defendant to show that the plaintiff ought to have taken reasonable steps to mitigate his loss and that the plaintiff would have avoided some part of his loss.  Where that is the case, the plaintiff cannot recover for that part of the loss which was reasonably avoidable.  The standard imposed on the plaintiff is not a high one in view of the fact that the defendant is the wrongdoer: Chitty on Contracts (32^nd ed) at paras 26-079 to 26-082.

119.  The last point about the standard of reasonableness is also made in McGregor on Damages (12^th ed) at para 9-079.  The learned author cites the following passage from Banco de Portugal v Waterlow [1932] AC 452 at 506:-

“Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.”

120.  In his defence, the defendant contends that the plaintiff has failed to mitigate his loss.  I set out the particulars pleaded in the defence:-

(a)  He failed to pay reasonable compensation in the sum of $82,250, as claimed by CMS in its first demand letter, as soon as possible, which caused Ng to commence the civil action.

(b)  He failed to pay the reasonable compensation in the sum of $85,750, as claimed in the civil action, as soon as possible after Ng commenced the civil action.

(c)  He failed to reach an amicable settlement with Ng and/or resort to a proper means of alternative dispute resolutions as soon as possible.

(d)  He failed to conduct the proceedings reasonably and to defend with reasonable grounds.  In particular, the trial judge found him to be completely incredible in the civil action.

(e)  He failed to seek proper legal advice on the proper conduct of the proceedings or alternatively if he did seek proper legal advice, he failed to act in accordance with it.

(f)  He incurred costs and/or caused Ng to incur costs which were unreasonable and totally unnecessary and grossly disproportionate to the reasonable compensation claimed by Ng.

(g)  He failed to challenge the bill of costs charged by Ng’s legal representatives, which was grossly disproportionate to the compensation claimed.

(h)  He failed to satisfy the judgment debt as soon as possible after he was adjudged to be liable by the court in those proceedings, which caused Ng to commence another set of recovery proceedings against him and the registration of a charging order against his property, which led to further costs, which were unreasonable and totally unnecessary.

(i)  He failed to borrow from a reputable and licensed bank at a reasonable rate of interest and/or failed to refrain from borrowing from a financial agency which charged an excessive rate of interest.

121.  In his closing submissions, Mr Yip also argued that the plaintiff should have joined the defendant as a third party in the civil action.  However, this point is not pleaded and the plaintiff has had no notice of this potential argument and has not been in a position to prepare his case to meet it.  I accept Mr Wong’s submission that the defendant should not be allowed to run this line of defence at this late stage.  In any event, Mr Yip has not identified which part of the loss now claimed by the plaintiff could have been avoided had the defendant been joined as a third party.

122.  In gist, the defendant complains that the plaintiff had failed to mitigate his loss at practically every stage where he took action consequent upon the defendant’s breach.  It would be apparent that the loss which was “avoidable” at each stage would be different.  In opening, I indicated to Mr Yip that the defendant might have to quantify the respective “avoidable” losses if the court was ultimately to find that the plaintiff had in fact acted unreasonably.

123.  However, as orally confirmed by Mr Yip in closing, the defendant’s position on mitigation is that he should only be held liable for the judgment sum of $85,750 plus fixed costs of $6,500.  He also confirmed that the defendant does not rely on any alternative position.

124.  I would say that it is not entirely clear to me what the defendant’s final position on mitigation is. In particular, I am not sure whether he is still relying on the pleas set out in, eg, para 120(g), (h) and (i) above.  Mr Yip has not made any detailed submissions on these pleas in any event.  But he has not expressly abandoned them either.  In the circumstances, I shall take it that the primary issue here is whether the plaintiff had acted unreasonably in pursuing his defence to Ng’s claim all the way to trial.  The question here is – should he have conceded liability upfront, paid the sum claimed by Ng and the more modest amount of costs incurred by Ng at a much earlier stage of those proceedings?

125.  Both Mr Wong and Mr Yip confirmed to the court that notwithstanding their research, neither of them have been able to find any case law which deals with a similar factual scenario, namely where a defendant fails to perform a contract under which he agreed to take responsibility for any third party claim that might be brought against a plaintiff.  Such case law would provide some guidance on how to judge the reasonableness (or unreasonableness) of such a plaintiff in his decision to defend or not to defend.  In the absence of such guidance, I shall have to go back to, and decide the present case, on first principles.

126.  The relevant time to consider the reasonableness issue is from the time when the plaintiff finally realised that the defendant was not going to honour the oral agreement.  That is, from around November 2011 onwards.  The defendant places heavy reliance on the judgment of the trial judge to demonstrate that the plaintiff’s decision to defend the claim was unreasonable.  It is therefore necessary to look at the grounds on which the trial judge found the plaintiff to be liable for Ng’s claim.  (I should add that that seems to be the main submission made by Mr Yip on the issue of mitigation.)

127.  At the trial, the plaintiff contended that he did stop at the “Stop” sign in the minor road and had a lookout for the traffic on the major road.  When he moved out of the minor road, he was driving at 10km/h.  He saw Ng’s car speeding across the junction.  He tried to steer left to avoid colliding with it but unfortunately it was too late.  He contended that it was Ng who was driving too fast and failed to keep a proper lookout.

128.  In her judgment, the trial judge considered that the police photographs and the car surveyor’s photographs, which recorded the damage to Ng’s car, as well as the sketch plans drawn by the police after the accident were “strong evidence” showing that the plaintiff’s public light bus must have been travelling at a much faster speed than he had claimed (paras 23 and 24).

129.  Further, the judge said this:-

“[The plaintiff] was driving from a side street into a major road. There was a “Stop” sign at the junction of Tai Nan Street with Wong Chuk Street, which was a major road, this sign and the double white lines warned him of the traffic on Wong Chuk Street before he proceeded further. He was required to stop from a side street entering a major road. I have no doubt he failed to do so on this wet night during a No 3 Typhoon Signal and I have no doubt he caused the accident because he did not pay attention to the traffic on Wong Chuk Street. I doubt if he stopped at the double-white lines at all. Instead, he was looking at the traffic lights which appeared in the next section of Tai Nan Street because he was too eager to move all the way through Tai Nan Street without stopping.” (para 29) (emphasis added)

130.  In conclusion, the judge ruled:-

“I find [the plaintiff] was completely to blame for the accident. He is liable to compensate [Ng] for the damages he caused to [Ng’s] car.” (para 32) (emphasis added)

131.  Earlier on, she also ruled that the plaintiff’s explanation on why he was looking at the traffic lights controlling the next section as “completely incredible”.

132.  The defendant’s submission is that given the trial judge’s ruling, it was unreasonable for the defendant to have carried on defending the claim.

133.  I am not satisfied that the defendant has demonstrated that the plaintiff had acted unreasonably in the conduct of his defence. 

134.  In my view, the relevant factors to take into account are these.  First, the plaintiff was a driver by profession.  In April 2012, he engaged a firm of solicitors to advise him on Ng’s claim.  He was legally represented throughout those proceedings. When faced with a civil lawsuit, to engage one’s own lawyer is a reasonable and sensible thing to do.  Further, as submitted by Mr Wong, there is no evidence before me to suggest that there was anything wrong with the legal advice given to him or that he failed to follow the legal advice.  Secondly, the plaintiff in fact succeeded in having the default judgment set aside.  It is implicit in such outcome that the master must have come to the view that his defence had at least a real prospect of success.  It is notable that at the setting aside hearing, counsel also made references to the police photographs and the sketch plan in skeleton submissions.  Such evidence was subsequently to be relied upon by the trial judge against the plaintiff at the trial.

135.  In the circumstances, I do not think it is open to the defendant to now say that the plaintiff should have admitted liability at an early stage of Ng’s proceedings.  The remarks made in Banco de Portugal are relevant here.  It is always easy for a defendant to criticise a plaintiff in his mitigation efforts with hindsight and to suggest alternative courses of action which should have been taken instead. However, one has to look at the actual position the plaintiff was in upon the defendant’s breach.  If we cast our mind back to late 2011 and early 2012, the plaintiff was acquitted of dangerous driving and careless driving.  He acted on independent legal advice.  He succeeded in having the default judgment set aside.  In my view, when faced with Ng’s claim, it was reasonable for him to carry on defending Ng’s claim.

136.  Accordingly, the defendant’s main contention on mitigation must fail.  As to the other grounds which have been pleaded but on which no submission has been made, I would make three observations.

137.  First, I agree with Mr Wong’s submission that there is simply no evidence before the court to support the pleas set out in para 120(e), (f) and (g) above.  As to sub-para (g), Ng’s costs were in fact taxed.

138.  Second, as to para 120(h), Mr Wong submitted that the plaintiff had limited financial means and that the defendant seems also to have accepted it.  In the circumstances, it is difficult to see how the plaintiff could have settled the judgment sum immediately, as envisaged by the defendant.

139.  Third, as to para 120(i), it ought to be noted that the defendant’s complaint here is not that the plaintiff should not have taken out a loan.  The objection is that he should have borrowed from a bank which would lend at “a reasonable rate of interest”, instead of a financial agency which charged “an excessive rate of interest”. 

140.  As mentioned above, there is no quantification of the “avoidable” loss in this regard.  The defendant has not led any evidence on what “a reasonable rate of interest” charged by a bank would be.  Furthermore, Mr Yip has not made any submission on law or cited any authority on this issue.

141.  On the facts as found, the plaintiff had tried to borrow from two banks by re-mortgaging his property.  But he had no success there.  He was left with no alternative but to borrow from a moneylender instead.  It must also be recalled that due to his punctual payments, there was a big reduction in the interest rate in the following year.  Hence, on the facts, no criticism can be made of the plaintiff.  He had done all that was practically within his ability to raise finance and settle the monthly payments, thus reducing the overall interest expenses as much as possible.

142.  On the law, Mr Wong relied on the House of Lords’ decision in Lagden v O’Connor [2004] 1 AC 1067.  As a matter of law, when measuring the damages payable to an injured party, where he has incurred more expenses in mitigating his damages by reason of his lack of financial means, the law requires that the wrongdoer to bear the consequences if it was reasonably foreseeable that the injured party would have to borrow money or incur some other kind of expenditure to mitigate his damages.  In such a case, the impecuniosity of the injured party will be taken into account.  The wrongdoer must take his victim as he finds him: Lagden at paras 7, 61; Chitty at para 26-083.  (Lagden concerns a tort claim but the passage in Chitty suggests that the notion should apply equally to a contract claim, as a matter of principle.)

143.  The defendant’s own evidence is to the effect that those drivers who hire public light buses are not generally financially well off people and that was why he accepted there should be a monetary cap on their liability for damage to the vehicles.  In the circumstances, I am satisfied that it was reasonably foreseeable that the plaintiff might have to incur more than usual expenses in his attempt to mitigate.  The defendant must take the plaintiff as he was and the higher interest expenses incurred should form part of the compensatable damages.

144.  In conclusion, the defendant has failed to demonstrate that the plaintiff acted unreasonably in his action consequent on the defendant’s breach.  What is striking in this case is that the plaintiff’s loss has ballooned from a fairly modest amount at the beginning to a large sum.  This has been due to how events had unfolded and the personal circumstances of the plaintiff (ie, his impecuniosity).  However, I am satisfied that the whole of the plaintiff’s loss has arisen and flown from the defendant’s breach of the oral agreement.

CONCLUSION

145.  Accordingly, there should be judgment for the plaintiff in the sum of $947,954.38.

146.  In the prayer for relief, the plaintiff seeks interest.  However, at the trial, the plaintiff did not make any submissions on the amount of interest which it seeks to claim, whether on an overall basis or in respect of each head of loss.  The issue of interest was not argued by the parties.  I therefore direct that if the plaintiff wishes to claim any pre-judgment interest, it should lodge and serve written submissions within 21 days from the date of this judgment stating the total amount claimed and setting out at what rate and for what period interest should accrue.  The defendant may lodge and serve written submissions setting out any objection, if any, within 21 days thereafter.  Interest will be determined on paper without a hearing. 

147.  I also make an order nisi that the defendant do pay the plaintiff’s costs of the action, to be taxed if not agreed, with certificate for counsel and that the plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.