KWOK WAI v. WIN BASE SERVICES LTD. AND ANOTHER and COSMIC INSURANCE CORPORATION LTD. (Intervener Intervener)

1995 No. P. I. 621

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES LIST

ACTION NO. PI-621 OF 1995

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J U D G M E N T

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1. This action came before me for determination of liability as between the 1st and 2nd Defendants on their respective contribution and indemnity notices dated 1st August 1995 and 21st July 1995. In view of the way that Counsel for the 1st Defendant (and Intervener) sought to conduct his client's case, and the submission that he surprisingly made somewhat late in the day, it is necessary to set out in short detail the nature of the Plaintiff's case, and in rather more extensive detail than I thought would be necessary the earlier proceedings and their implications.

2. The Plaintiff was employed by the 1st Defendant as a labourer in its transport business. The 1st Defendant frequently hired a lorry with a crane, and a driver for the lorry to assist in its business and the necessary loading and unloading of goods. On 8th August 1992 whilst he was standing on the hired lorry engaged in unloading he was struck by the hook or jib of the crane and knocked to the ground sustaining injury. He sued his employer and the owner of the lorry and crane. The basic allegation against his employer was that there was an unsafe system of work, and against the employer of the lorry/crane driver, negligence in the operation of the crane. In their defences each Defendant blamed the other and alleged contributory negligence on the part of the Plaintiff. The Plaintiff obtained interlocutory judgment against the 1st Defendant on 21st March 1997 it being in default of an order requiring it to file and serve its list of documents.

3. The Plaintiff continued its action against the 2nd Defendant.

4. There had been Employee's Compensation proceedings by the Plaintiff against the 1st Defendant commenced in 1993. He obtained judgment in 1994 for compensation to be assessed. It was finally assessed in February 1996. The 1st Defendant's insurers had repudiated liability under the policy and initially the Plaintiff was unable to obtain payment. Eventually the insurers concerned, Cosmic Insurance Corporation Ltd satisfied the judgment.

5. In May 1998 following a payment into court by the 2nd Defendant in satisfaction of the Plaintiff's claim, I ordered a stay of the Plaintiff's action and a trial of the contribution proceedings between the Defendants. At that stage the 1st Defendant had ceased to be involved for some time.

6. The insurers of the 1st Defendant then decided to intervene in the High Court action in order to protect their position under the policy, their insured having allowed a default judgment to be obtained. To that end an affirmation was filed by Mr. Chan Kar Fung of the firm of solicitors acting for the insurers. In paragraph 3 he succinctly set out the position:

"On 8th August 1992, the Plaintiff herein suffered injury by accident arising out of and in the course of his employment with the 1st Defendant. The accident also involved negligence on the part of the 2nd Defendant."

A date had been fixed for the trial of the contribution proceedings but since the insurance company wanted to take over conduct of the proceedings they needed some time to prepare in order to be able to resist the 2nd Defendant's claim properly. It appears that there had earlier been proceedings by the 2nd Defendant against the insurers of the 1st Defendants seeking a declaration that the insurers were liable to meet any order for damages and costs arising out of the contribution proceedings. Those proceedings had however been discontinued. An order was made giving them leave on condition that they paid such damages as the court apportioned against the 1st Defendant (There is a misprint in the order. It refers to the 2nd Defendant in this regard whereas it must mean the 1st Defendant. It would not otherwise make sense.) The sole issue remaining for determination since judgment had already been obtained against the 1st Defendant and there had been no application to set this aside, was the extent to which the 1st Defendant was liable, if at all, to indemnify in respect of or contribute to the settlement of the Plaintiff's claim. The affirmation made that clear. The Plaintiff's entitlement as against one or both Defendants was not in dispute.

7. That was the basis upon which these proceedings were opened by Miss Christina Lee for the 2nd Defendant. She had provided the court with a skeleton opening, a list of authorities (with copies), and her instructing solicitors had lodged a bundle of pleadings, statements, agreed documents and non-agreed documents. The last consisted of medical reports on the Plaintiff but it was never contended by the 1st Defendant from the time that the Intervener took over proceedings on behalf of the 1st Defendant, that any payment made by the 2nd Defendant in settlement was inappropriate (i.e. excessive) or that the medical reports disclosed a state of affairs which did not justify the 2nd Defendant acting as they had. The 1st Defendant's Counsel provided nothing. There was no statement supplied on behalf of them.

8. The evidence called on behalf of the 2nd Defendant was in the form of oral testimony from the 2nd Defendant's director, Mr. Chan Chi Ming, and its employee, Mr. Tsang Tung, the lorry/crane operator.

9. The contracts of hire of lorry and driver to the 1st Defendant had occurred on about 30 occasions. They always involved the driver/operator being under the control, direction and supervision of the hirer. No complaints had ever been made by the 1st Defendant as to the drivers in general or Mr. Tsang's competence in particular, in acting under its direction and supervision. Such driver/operators were attached to a 'veteran' driver/operator to learn how to operate the crane in the daily business on which they would be dispatched. Each driver knew what sort of work that he would be expected to carry out but that all instructions would be given at the place of work by the hirer. The 2nd Defendant never hired out workmen as signallers for the operation of the work - only driver/operators.

10. The driver/operator concerned, Mr. Tsang Tung, is now retired. He had been operating cranes on the back of the 2nd Defendant's lorries for 6 or 7 years at the time of the accident. During the occasions when he and the lorry had been hired by the 1st Defendant instructions had been given to him by Mr. Tong the director of the 1st Defendant, when he had been present, or by the Plaintiff if Mr. Tong were absent. This practice was confirmed by Mr. Tong when he gave evidence. When Mr. Tong was present to give instructions, they were given by signal and Mr. Tsang could see him. However, when the Plaintiff alone gave instructions they were invariably oral such as "lift up", "to the right" or "to the left".

11. On the day in question, Mr. Tong had gone into a warehouse on the arrival of the loaded lorry. It had been loaded at Kwai Chung with the Plaintiff giving orders. Initially he had been visible to Mr. Tsang but when the loading had reached a certain stage, he ceased to be visible and orders or instructions proceeded on an audible basis only.

12. At Shatin the Plaintiff climbed onto the tray of the lorry and gave oral instructions. He was not visible to Mr. Tsang. The first stage was for the Plaintiff to fix the hook in wire binding the crate for lifting and offloading. Mr. Tsang complied with an order to move the jib over the top of the goods but the next thing he was aware of was that he heard something fall to the ground. It was the Plaintiff.

13. At some stage during the course of his cross-examination of Mr. Tsang, Counsel for the 1st Defendant put to him that he had admitted to Mr. Tong that he had operated the wrong control of the crane - that he had pressed the wrong button. This positive allegation came as some surprise to me, and, I anticipate, to Miss Lee. Quite apart from the fact that there was no allegation in the defence of the 1st Defendant that Mr. Tsang had operated the wrong control and this caused the accident in that way, there was nothing at all in Mr. Tong's disclosed signed statement to that effect, or even hinting at such an admission. When I pointed out these matters to Mr. Lo and that there was, as far as could be ascertained, no basis for such a suggestion, he informed me that he had had a conference with Mr. Tong who had told him of that admission, that there had been no time to obtain a written signed statement from Mr. Tong, and that he had a draft statement which he was using as the basis of his cross-examination, but which had not been disclosed to the 2nd Defendant's Counsel Miss Lee. This somewhat astonishing state of affairs led to an exchange between myself and Mr. Lo in which he contended that there was evidence to support his cross-examination (which there was not) and he went on to say that he was not sure whether Mr. Tong would be attending court to sign his statement or give evidence. I made it clear to him that I was not prepared to allow him to cross-examine on this suggestion in view of the state of the pleading, and that he was not in possession of the essential pre-requisite for such an allegation, namely a signed statement, containing such a matter, and which had been disclosed to Counsel for the 2nd Defendant. Mr. Tsang had in fact denied such suggestion.

14. Mr. Lo's cross-examination proceeded on the basis that the accident to the Plaintiff was entirely the fault of Mr. Tsang in operating the crane negligently and without instruction, and that he ought to have asked for a signaller.

15. Mr. Tong did in fact attend court and gave evidence on the second day of this case which should have finished on the first day. Mr. Lo proceeded to examine him in chief but it became readily apparent that Mr. Tong was being taken through his evidence on the basis of some material which was not before the court. When I stopped proceedings to ask Mr. Lo if he was in possession of a statement he agreed that he was. It transpired that Mr. Tong had signed the statement to which Mr. Lo had referred the previous day, and Mr. Lo was using this statement but had not supplied a copy to Miss Lee or to the Court. I adjourned proceedings for these omissions to be remedied. When the court resumed Miss Lee fairly took the view that the statement though disclosed inexcusably late, did not prejudice her case. Accordingly I allowed Mr. Lo to proceed.

16. Mr. Tong went on to confirm that the Plaintiff would remove the means of securing the crates on the lorry and that normally the Plaintiff and Mr. Tsang would wait for his instructions as to where the goods should be placed. The system usually adopted was for him to give signals to Mr. Tsang after the Plaintiff had given him a signal that the hook was in position. However he agreed that when he could not be present, he left the Plaintiff and Mr. Tsang to make arrangements between themselves. He relied on their being able to see each other, and the signals given. It was clear to me that on occasions Mr. Tong trusted to luck in a lax, haphazard system whereby Mr. Tsang and the Plaintiff relied upon audible instructions until the load on the lorry had been reduced to the point where they were visible to each other and could rely upon hand signals. That is what occurred on this occasion. The two men got on with the unloading, whilst Mr. Tong was carrying out some essential matters following arrival, a practice in which Mr. Tong acquiesced. Mr. Tong said that he had never experienced any problem with Mr. Tsang on any previous occasion, that the Plaintiff was able to give instructions to Mr. Tsang, in his absence, and that he or his employees were responsible for giving signals on unloading to the crane operator. Mr. Tong could not however recall ever giving specific instructions as to what to do or how to do it when he was not going to be there.

17. On the completion of Mr. Tong's evidence-in-chief, it was clear that he had not been asked about any conversation he had with Mr. Tsang as to what precisely had happened to the Plaintiff. I therefore asked him if he had asked him how the accident had happened. He replied that Mr. Tsang had said that the jib hit Mr. Kwok and that he fell from the top of the tray. This accident had occurred nearly 61/2 years ago. Mr. Tsang has no clear memory and had not been able to see clearly. He had to surmise or rely on what Mr. Kwok told him. Mr. Tong's recollection which was not clear may have been somewhat mistaken. The Plaintiff's case had been that the hook had struck him and caused him to fall. The precise mechanism was not necessary for a determination. Some part of the crane had caused him to fall.

18. What was also clear was that Mr. Tong, though given every opportunity to do so, did not suggest that Mr. Tsang had made any admission of incorrect operation of the crane controls. The copy statement supplied by the Defendant's Counsel had originally contained a sentence to the effect of the allegation which Mr. Lo had put to Mr. Tsang earlier which Mr. Tsang had denied. It had however been crossed through and initialled. When I asked Mr. Lo the reason for this, I was informed that he had himself struck it out because on the earlier occasion I had given a strong indication that it was not admissible. I had indeed, as matters then stood, indicated strongly that there was no basis for it being alleged. However as Mr. Tong had now made a signed statement, even though that sentence had been struck through, I thought it fairer to give him every opportunity to make such an allegation. Nothing he said bore any resemblance to the allegation as it had appeared in the written statement, nor to the allegation as Mr. Lo had put it to Mr. Tsang.

19. At an early stage of his final submissions Mr. Lo sought to argue that there was no evidence that the Plaintiff had been struck and injured as a result of anything which occurred in the course of unloading or preparation for unloading. He tried to argue that the Plaintiff may have had an epileptic fit and referred to a line in a hospital memorandum on page 40 of section C of the bundle wherein was a mention of "hypotension and bradycardia". The date is uncertain but its follow-up investigation is dated 26th January 1996. It is difficult to see how either of these conditions could give rise to Mr. Lo's suggestion of epilepsy. The following hospital records show an examination of the condition with a possible diagnosis of psychosomatic disorder. There is no medical evidence to support this idea advanced by Mr. Lo.

20. More importantly however, there had been no dispute as to the basic cause of the Plaintiff's injury. It had been stated as a fact in the affirmation sworn by the 1st Defendant/Intervener's solicitors. It was an agreed basic fact upon which these contribution or indemnity proceedings were pursued. Mr. Lo's instructing solicitors have never raised any such issue of causation in reply to the 2nd Defendant's solicitors letter of the 15th May 1998 which set out in full detail how they arrived at the sum of $1m. paid into court and accepted by the Plaintiff. Mr. Lo had at no stage suggested either to Miss Lee, or to the Court, that causation of the Plaintiff's injuries was in issue. In fact his cross-examination of witnesses was directed entirely to trying to show that the 2nd Defendant, its servant or agent, had caused the Plaintiff's fall through negligent operation of the crane. The original judgment in default against the 1st Defendant remained in force. No effort had been made to set it aside.

21. Quite apart from these matters there was clear evidence from which one could properly conclude that the Plaintiff's fall and injury was caused by contact with some part of the crane, not least that of the crane operator, Mr. Tsang. I am quite satisfied that he was injured by contact with the crane or part of it.

22. There was no satisfactory system of instruction and unloading on the day in question. The Plaintiff was left to get on with the process and had authority to give instructions to Mr. Tsang. The job had been done by the two of them, with Mr. Tong's tacit or express agreement, on previous occasions. It was fraught with risk because there was a stage when the operator and the Plaintiff were not visible to each other and relied upon shouted instructions.

23. The operator was supplied to carry out work under the instructions of the hirer. The hirer devised the system of work. It was unreasonable to expect Mr. Tsang to ask for a signaller. When Mr. Tong was the third man in the system, it was satisfactory. When there were only two men it was patently unsafe. The crane operator was not negligent in his operation of the crane. He acted on the Plaintiff's instructions. He was entitled to rely upon Mr. Kwok's instructions since Mr. Tong had given Mr. Kwok authority so to act. He was also entitled to assume that Mr. Kwok knew what he was doing when he gave an instruction. But of course the system carried a risk that Mr. Kwok perhaps was not always sufficiently alert or aware at the time that his instruction was being carried out. He may have been badly positioned on the load. He may have been distracted in preparing another crate for loading when the crane jib or hook came back to be attached. In such an unsafe system, with restricted visibility, there is a clear risk of such an accident occurring, when neither operative is visible to the other, in a variety of ways.

24. Cases which have come before the court fall into two groups. The first is where damage has been caused by an employee in the general employment of one employer, who is working under the directions of a second employer. The second is where the employee of such general employer working under the directions of a second employer suffers damage. Clearly this case falls within the first category. There the general employer may be able to escape vicarious liability, [see Nelhams v. Sandells Maintenance Ltd and Gillespie (U.K.) Ltd [1996] P.I.Q.R. p.52].

25. In Morris v. Breaveglen (t/a Anzac Construction Co) [1993] I.C.R. 766 (which had been judicially considered in Nelham's case) Lord Justice Beldam propounded as a test the following:

"When the question is which of two possible employers is to be vicariously responsible for the acts or omissions of an employee, it has been found useful as a test to decide which of them was responsible for controlling the actions of the employee which caused the injury; so, in particular, where a skilled man is hired out with plant, which it is his duty to operate, a distinction has been drawn between his actions in carrying out tasks under the direction and control of the "employer" to whom he has been hired and his actions simply in operating the plant. In the former case the particular employer to whom he has been hired, having directed him to carry out a particular task which gives rise to a risk to some third party, bears responsibility if in carrying it out the employee causes injury. But if injury is caused to a third party from the operation of the plant itself a matter left entirely to the skill and judgment of the plant operator and which the particular employer to whom he is hired has no right to dictate to him, then the general employer will be responsible for the actions of its employee."

26. That decision was made after reviewing a number of authorities including Wilsons & Clyde Coal Company v. English [1938] A.C. p.57, Mersey Docks and Harbour Board v. Coggins & Griffith [1947] A.C. p.1, the classic case on the general employers vicarious liability for the negligence of its employee in the operation of equipment, and Denham v. Midland Employers Mutual [1955] 2 Q.B. p. 437.

27. Mr. Lo directed my attention to the Privy Council decision of Karuppan Bhoomidas v. Port of Singapore Authority [1978] W.L.R. p.189. Lord Salmon gave the judgment of the Committee having considered a number of cases including Mersey Docks and Harbour Board. The point in that case however was largely concerned with whether the Port of Singapore Authority, who employed the Plaintiff, as well as a number of other stevedores including the person whose negligence caused the death, could avoid liability as employer. It had sought to rely upon a by-law as exempting it from the negligence of its employees (the stevedores) on the basis that "serangs and labourers employed in discharging and loading vessels shall be under the superintendence of the ship's officers." The Privy Council held that this by-law did not put the servants of the port authority under the entire and absolute control of the ship. "Superintendence" was a loose and somewhat ambiguous word. Accordingly The Port Authority remained vicariously liable for its servant's negligence, if such negligence causes personal injury to a fellow servant or to a member of the public.

28. The circumstances were somewhat different from the case before me. In any event the relation of shipowner to stevedores is very different from that of the circumstances under review and considered in the more recent authorities.

29. I am satisfied that the 2nd Defendant did not retain direction, control or supervision of Mr. Tsang in the work he did when hired with lorry/crane to the 1st Defendant. They would certainly have remained vicariously liable for any negligent operation of the crane by him. Here they had on a number of occasions hired out lorry and driver/operator to the 1st Defendant where the course of such business included direction, control and supervision of loading and unloading, and the general system of work being the responsibility of the hirer. There was no negligence by Mr. Tsang in the operation of the crane. The 2nd Defendant has discharged the onus upon it. The 1st Defendant was negligent in the respects I have set out.

30. Mr. Lo also relied upon 15B(1) of the Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations (Cap. 59) as fixing the 2nd Defendant with responsibility for the provision of an effective signalling system. True it is that the regulation imposes upon the owner of the lifting appliance a duty to appoint and station such persons as may be necessary to give effective signals to the person operating the lifting appliance to ensure its safe working, but owner includes lessee or hirer. The duty is on the 1st Defendant. There is no substance in this argument.

31. Accordingly I find that the 1st Defendant was solely responsible for this accident, looking at the matter in terms of "blameworthiness and causative potency", an approach indorsed by the English Court of Appeal in Nelham's case. There will therefore be judgment for the 2nd Defendant with costs against the 1st Defendant. There will be an order that the 1st Defendant's insurers (the Intervener) indemnify the 2nd Defendant in respect of the sum paid by them in settlement of the Plaintiff's claim together with the costs paid in the action. There will also be an order that the Intervener pay interest upon the said sums to the 2nd Defendant at the prevailing rate, from the date of payment by the 2nd Defendant, to the date of judgment.