SUNNEX PRODUCTS LTD v. SUEN SHUK LING t/a IN TERNATIONAL PIAZA MOTOR SERVICE CO

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Judgment

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1. This is an action brought by the plaintiff against the Defendant for the recovery of the value of its vehicle registration No. DJ9928 (hereinafter called the "vehicle") which was left with the Defendant on 11^th March 1993.

2. The vehicle was a Mercedes Benz 500SEL manufactured in Germany in 1986. It was purchased by the Plaintiff directly from Germany without going through the sole agent in Hong Kong. The vehicle was first registered in Hong Kong on 13^th May, 1986. By March. 1993, the vehicle was approaching 7 years old and any renewal of its licence would require the vehicle to pass an examination by an authorised inspector.

3. I accept the evidence of Mr. Tam who was the general affairs manager of the Plaintiff and who was in charge of the vehicles owned by the Plaintiffs that on 4^th March, 1993, he had already driven the same vehicle to the Defendant's garage for the purpose of asking the Defendant to examine the same and to do the necessary repairs so as to enable the vehicle to pass the examination by the authorised inspector. According to Mr. Tam, he obtained a verbal quotation from the Defendant in respect of the cost for the Defendant's own examination of the vehicle, the carrying out of the necessary repair work and also the work in sending the vehicle for examination by an authorised inspector and obtaining the necessary inspection certificate. However he could not remember clearly the amount which the Defendant had quoted to him. His best recollection was that the amount quoted would be about $5000. Given the amount of work involved and also that admittedly the car had at least the problem of oil leakage, and the evidence from the Defendant as to the range of cost for fixing up oil leakage problems, I do not think that Mr. Tam's recollection of the quotation being $5000 was correct. However I do accept that a certain quotation had been given to Mr. Tam which served as some sort of indication of the cost of the work required of the Defendant. I also accept the evidence from Mr. Tam that during this meeting of 4^th March, 1993 an arrangement was made with the Defendant for the Plaintiff to bring the vehicle to the Defendant's garage again on 11^th March, 1993 for the work to be carried out.

4. On 11^th March, 1993, in pursuance of the arrangement made on 4^th March, 1993, Mr. Tam drove the vehicle to the Defendant's garage at Wan Hoi Road. When he arrived, he found that the Defendant's garage was already full and there was no space for his vehicle. Mr. Suen, the sole proprietor of the Defendant signalled to him to park the vehicle at a side street near the Defendant's garage. He did so as indicated. After he got down from the vehicle he met with Mr. Suen and had a very brief conversation with Mr. Suen. According to Mr. Tam whose evidence in this respect I accept. Mr. Suen asked him for his name card and told him that he would be notified to collect the car after the examination by the authorised inspector was completed. Mr. Suen also asked him for the vehicle registration certificate. However Mr. Tam did not have the certificate with him so he arranged to deliver the vehicle registration certificate to Mr. Suen the next day. Mean while it was common ground that Mr. Suen had asked one of his staff to drive the vehicle away. There was a dispute as to whether Mr. Suen had in the presence of Mr. Tam told his staff to park the vehicle at the car park. On this point I am prepared to accept the evidence of Mr. Suen that he did tell his staff Ah Wai to park the vehicle at the car park. However I do not accept that Mr. Tam would appreciate that the vehicle would be parked at the Ip On car park or had consented to accept any risk arising from the car's being so parked at the Ip On car park. After the vehicle was handed over to the Defendant, there was no reason for the Plaintiff to be concerned with where exactly the Defendant would like to put the vehicle pending the work to be done to the vehicle.

5. In this state of affairs, I am of the view that there was a contract between the plaintiff and the defendant whereby the defendant had agreed to carry out an examination of the vehicle, the necessary repair to the vehicle, and to arrange for the vehicle to be examined by an authorised inspector. Of course the plaintiff would pay for the defendant's charges for such services. Even if there was no lump sum agreed between the parties for the Defendant's work, I am of the view that it must be implied that the Defendant should be entitled to be paid a reasonable sum in accordance with the Defendant's usual charges. In the circumstances, I am of the view that the Defendant became a bailee for reward in respect of the vehicle and would be liable to return the vehicle to the Plaintiff upon completion of the work or upon the termination of the contract with the Plaintiff.

6. It was not seriously in dispute that the Defendant's staff An Wai was unable to gain entry to the Ip On Car Park which was within a short distance from the Defendant's garage. Eventually the Defendant had successfully borrowed from another customer a monthly pass for that car park and with that pass the Defendant had himself driven and parked the vehicle at the Ip On Car Park.

7. The evidence from the Defendant was that in the evening of the same day he went to fetch the car from the Ip On Car Park. He found that the car was missing. He went back to his garage and asked his colleagues as to whether they saw the car. Apparently no one saw or knew the whereabouts of the car. He then tried to contact Mr. Tam but failed to get in touch with Mr. Tam. He then reported the matter to the Ngau Tau Kok Police Station.

8. There was however some disputes as to when he went to fetch the car that evening. According to his evidence in court, he said that he went between 7 p.m. and 8p.m and that he went immediately after a space had become available in his garage. On the other hand, he made a statement to the police that same evening at 11.05 p.m. In this statement he told the police that at about 20.30 that day when he had completed all his work at his garage he went to the Ip On Car Park to get the car back to his garage so that the car could be repaired the next day. I am of the view that what he said to the police was correct and accurate. I find as a fact that he only went to the car park to fetch the car after his work for the day was completed. In his evidence in cross examination, he said that there were spaces available in his garage between 3.45 p.m. and the time when his garage closed however he was unable to remember how many spaces had become available. Bearing in mind that it was most unlikely that more than one of his customers would take away their cars just before the garage would close for the day, it seems to me unlikely that there was the co-incidence that spaces had just become available just before his garage would close. In view of the fact that the parking facilities at the Ip On Car Park did not actually cost the Defendant anything, I see no particular reason for the Defendant to hurry to retrieve the car from the Car Park as soon as a space had become available in his own garage.

9. The vehicle was never recovered and the Defendant was unable to redeliver it back to the Plaintiff. It was common ground that as a bailee for reward, the Defendant would be liable for the loss of the vehicle unless the Defendant could show that the loss did not result from a failure on his part to exercise such care and circumspection as could reasonably have been expected from a bailee of his trade and standing in all the circumstances of the case. (see Bailment by Palmer 2^nd edition page 780).

10. The main issue in this case is whether the Defendant had discharged the burden of showing that the loss did not result from the failure to exercise reasonable care on his part. The Defendant's counsel submitted that the burden was discharged because the Defendant had taken reasonable care of the vehicle in all the circumstances of this case. She pointed out that before the Defendant left the vehicle at the Ip On Car Park, he had taken the precaution of locking all its doors. The car park was the only car park near by. It was managed by the Housing Authority and was not open to the public but instead was only open to persons parking on monthly basis only. It was also suggested that there was a booth for guards to be stationed at the entrance of the car park and that there were security guards on patrol as evidenced by the fact that patrolling books were kept at certain places of the car park for the guards to sign during patrolling duty. It was also suggested that the car park should be safe as it was opposite to a police station and that as the vehicle was in fact parked on the first floor of the car park, it could not been seen by persons from the street. The Defendant further told me that he was not aware of any previous instances of theft of cars parked in the car park and that even he himself had often parked his own vehicles at the same car park.

11. Notwithstanding all these factors, I am of the view that the Defendant had not discharged the burden in this case. The Defendant must realise that if he did not take proper care of the vehicle, it was liable to be stolen. In this respect I would not accept the evidence from the Defendant that he was not aware of the fact that car thefts were rather prevalent in 1993. Although there was no evidence adduced to show how many car thefts had occurred in that year, there was evidence from Mr. Lam Wing Nin that in the years of 1993 and 1994 the problem of car thefts was very serious. In any case, I am of the view that I am entitled to take judicial notice that car thefts were a rather common offence in those years. In my view, it was no answer to say that the vehicle was being parked inside a car park managed by the Housing Authority. Although there was no evidence of any previous incidents of theft in this car park, it did not per se mean that cars parked inside the car park would not be liable to be stolen. In the present case, although the car park was not catered for hourly parking, it was admitted by Mr. Suen that any member of the public could have free access to the car park. Further more even for parking purposes, it was clear that the monthly pass issued by the car park could be used by persons other than the one to whom the pass was issued and indeed it was the Defendant's case that he made use of a monthly pass borrowed from another customer in order to park the Plaintiff's vehicle in this car park. It was most unusual for monthly car parking passes to be freely transferable. The fact that the Defendant had succeeded in using other people's pass for parking the Plaintiff's vehicle would indicate that the security control of the car park must be rather loose. Further more the evidence would indicate that there was no barrier at all at the exit of the car park so that cars could get out of the car park freely. Although there was a security booth at the entrance of the car park, there was no evidence to show that there was any security booth at the exit. Further more although there was books for the patrolling guards to sign, there was no evidence as to how often the security guard would patrol through the car park. In my view the security system adopted by this particular car park was clearly inadequate. As the Defendant was himself a frequent user of this car park, he should have appreciated the inadequacy of the security system of this car park. It was in my view no answer to say that the Defendant was himself confident enough to park his own vehicles in the same car park. In this regard the evidence was that the Defendant's own Mercedes parked in the same car park was fitted with an anti theft security gear box lock which, according to the Defendant was the most effective device to prevent car theft.

12. Accordingly I am of the view that the Defendant is liable to the plaintiff for the loss of the vehicle.

13. The next question is the quantum. The parties were agreed that the quantum of loss would be the value of the vehicle as on the date of the loss i.e. on 11^th March, 1993. The Plaintiff relied on the evidence of Mr. Lam Wing Nin who was employed by General Surveyors and Adjusters Limited responsible for assessing insurance claims on loss and damage of motor vehicles. He made a report dated 1^st April, 1993 and in his report he opined that a vehicle of the same model and age as the subject vehicle in this case should be valued at the region of $440,000 to $470,000 as at the time of the loss. In his report he gave no basis for his estimation. However when giving evidence before me, he told me that before he wrote his report, he rang up 4 to 5 second hand motor companies to enquire of the price of a second hand car of the same made model and age. Apart from the 4 or 5 second hand motor companies, he also made enquiries from some salesmen of Zung Fu who was the sole agent of Mercedes Benz in Hong Kong. According to him, the salesmen were usually very familiar with the second hand prices of the vehicles they sold. He also told me that he had also consulted some motor magazines. Other than telling me that one of the 4 or 5 second hand motor companies he consulted was Sunning Motors he did not disclose the identity of any of the sources he resorted to. He told me that the range off $440,000 to $470,000 represented the range of the figures he obtained from his various sources. He accepted that the value of a second hand car would depend on its age, condition and mileage. However he did know the condition of the car and in his assessment, he assumed that the vehicle was properly maintained. However he made no assumption on the mileage covered by the vehicle. Given that the mileage must be an important factor affecting the value of any second vehicle it is difficult to accept his valuation of $440,000 to $470,000 on its face value. He agreed however that if the vehicle had an oil leakage problem then the value should be lowered by the cost of the oil leakage repair.

14. The Defendant on the other hand relied on the evidence of Mr. Stewart Wong of Kingsley Sit & Associates which was also a firm of loss adjusters, surveyors and valuers. He prepared a report of his valuation dated 20^th January, 1996 and he valued the vehicle at HK$250,000 to $300,000 as at 11^th March, 1993 on the basis of the vehicle being in reasonable good working condition with moderate use in mileage. He told me that before he made his report, he spoke to 4 used car dealers, viz: Sunning Motors, Century Motors, Auto Trade Center and Used Motors Ltd to ask them about the price of a second hand vehicle of the same made and age as the one lost. He produced a computer print out which he said was given to him by Used Motors Ltd indicating that in January 1996 a 1986 Mercedes Benz 500SEL would be offered by this company for sale at $220,000. He said that on top of asking for the price for this vehicle as at 1996 and for which he was given the computer print out in answer, he also verbally asked one Mr. Chan of Used Motors what the price of this same car would be in 1993 and was told that it would be between $250,000 to $300,000. However no computer print out was made available to him for the price in 1993. This is hardly surprising given the fact that these prices would be updated from time to time and there was no particular for any one to keep a computer print out of some out-dated prices. It was not clear as to whether in making enquires from other second hand motor dealers he asked for in formation of the prices as at 1996 or 1993. As least in the case of Auto Trade Centre since the making of his report, he obtained information that a 7 years old Mercedes 500SEL was being offered at $268,000 and the salesman told him that the deal could be concluded at about $230,000. I do not consider that this piece of information to be of much weight as the value of second hand cars would depend on the supply and demand situation of that particular model at any given time. It was also affected by whether there was any new model of the same made available in the market and the price of the new car for the same model. Thus price of a 7 years old i.e. a 1989 Mercedes 500SEL in 1996 need not be the same as the price of 7 years old i.e. 1986 Mercedes 500SEL in 1993.

15. In further support of his valuation, Mr. Wong also produced an advertisement for the sale of a 1984 Mercedes 500SE published on 2^nd July, 1993 at the price of $300,000. It was obvious that a 1986 model should be more expensive than a 1984 model and that a 500SEL model should be more expensive than a 500SE model. Hence if the information in this advertisement was a reliable indication of the value of second hand Mercedes cars, the value of the subject vehicle should be higher than $300,000. However Mr. Wong's opinion was that the advertisement could not be a reliable indication as the car was offered by a private individual who might not know what his car was actually worth. Instead he was of the opinion that the views and information from second hand car dealers should be more reliable. He was then cross examined on the price information he was given by Sunning Motors. On cross examination, he admitted that he was told by Sunning Motors that a 1986 Mercedes 500SEL in good condition would cost about $400,000 in 1993 which was of course higher than the upper range of his valuation. He said that he did not adopt the figure of $400,000 as that was on the basis that the car was in good condition whilst he was concerned with valuing a car of fair condition. However it is patent from his report that his valuation of $250,000 to $300,000 was based on the car of good working condition.

16. In the end, I do not find the evidence of either Mr. Lam or Mr. Wong to be wholly convincing. Apart from not disclosing the source of his information, Mr. Lam did not strike me to be a man very knowledgeable in the motor trade. For instance he was unable to give me the correct information on the conversion between Kilometre and mile which should be known to some one familiar with second hand motor trades as it was often necessary to convert the mileage of a car from kilometres to miles and vice versa. Doing the best I can I would assess the value of 1986 Mercedes 500SEL vehicle at $400,000 as at March 1993 on the basis that it was in good working condition.

17. However that is not the end of the matter. The Plaintiff's vehicle was not in good working condition. It had at least oil leakage problems. Although there might or might not be any other problems not yet detected. I do not think that I should take into account of any other possible problems. The evidence from the defendant was that to remedy such oil leakage problem might cost between $20,000 to $30,000. Although there was no suggestion that it would have costed the same in 1993, there was no evidence that the cost of car repairs had gone up substantially in the last 3 years. Again doing the best I can, I would consider that the value of the vehicle should be reduced by $20,000 to take into account the cost required for putting the car back to good working condition. My conclusion is that I would assess the value of the vehicle lost by the Plaintiff to be $380,000.

18. There will be judgment for the Plaintiff in the sum of $380,000 with interest at 1% above the prime rate from 18^th March, 1993. I direct that interest should only run from 18^th March, 1993 as I think that the plaintiff could not reasonably expect to have the use of his vehicle on 11th March, 1993, the date of the loss of the vehicle, because if the vehicle was not lost at all, the vehicle would have been kept by the Defendant in order to carry out the examination and repairs, I would estimate that 7 days should be a reasonable period for the Defendant's work. I would also make an order nisi that the Defendant should pay the Plaintiff's cost of this action.