WONG WAI YEE t/a KWONG KEE METAL WARES MANUFACTORY v. THE INCORPORATED OWNERS OF TAI TUNG INDUSTRIAL BUILDING AND ANOTHER

HCA 11462/1993

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11462 OF 1993

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J U D G M E N T

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1. This case arises out of a fire on the afternoon of 28 June 1992 at the Tai Tung Industrial Building in Kwai Chung. The fire broke out at a factory on the 4th floor. A large quantity of the water used to extinguish the fire flooded into a factory on the 1st floor damaging stock, machinery, moulds, office equipment and the flooring of the factory. The claim which resulted from this was considerable but not enormous. It was for $191,950.00. Unfortunately the costs have become enormous.

2. At one stage no less than five persons were before the court. One is of course the proprietor of the flooded 1st floor factory who came to court as the plaintiff. The four persons brought to court are: the Incorporated Owners of Tai Tung Industrial Building ("the Incorporated Owners"); Golden Bell Plastic Factory Limited ("Golden Bell"); Chou Shik Tong trading as Sung Wah Building Construction Company ("Sung Wah"); and Siu Kit Keung trading as Siu Keung Kee ("Siu Keung Kee").

3. At the time of the fire, the building was undergoing repair and renovation. Sung Wah was the main contractor and Siu Keung Kee was its sub-contractor. What had happened was that Sung Wah had entered into a main contract dated 6 March 1992 between the Incorporated Owners as employer and itself as main contractor. In anticipation Sung Wah had arranged for Siu Keung Kee to execute some of the works. One sees this from a sub-contract dated 2 March 1992 made between Sung Wah and Siu Keung Kee.

4. Golden Bell is the proprietor of the 4th floor factory at which the fire broke out. The plaintiff brought in the Incorporated Owners as the 1st defendant and Golden Bell as the 2nd defendant. The Incorporated Owners brought in Golden Bell as the 1st third party. Golden Bell brought in Sung Wah as the 2nd third party and as the fourth party, Sung Wah brought in Siu Keung Kee as the fifth party.

5. Even before the trial began before me on 30 March 2000, Siu Keung Kee's defence to Sung Wah's claim for an indemnity had been struck out for failure to comply with an "unless" order and judgment for an indemnity had been entered in favour of Sung Wah against Siu Keung Kee. On the second day of the trial, 31 March 2000, the plaintiff settled with the Incorporated Owners and Golden Bell on the following terms which their respective counsel signed:

"1. Judgment be entered for the Plaintiff against the 2nd Defendant/1st Third Party in the sum of HK$190,000.00 inclusive of interest in full and final settlement of the main action as between the Plaintiff and the 1st and 2nd Defendants, such sum to be paid within 14 days of today's date.

2. The Plaintiff's claim against the 1st Defendant be discontinued.

3. There be no order as to costs as between the Plaintiff and the Defendants.

4. Any previous costs orders made against either of the Plaintiff, 1st Defendant and/or 2nd Defendant in this action shall be waived."

I made a consent order embodying those terms.

6. At the same time the Incorporated Owners and Golden Bell settled the third party proceedings brought by the former against the latter, doing so on the following terms which their respective counsel signed:

"(1) the Third Party Proceedings between the 1st Defendant and 1st Third Party be discontinued;

(2) there be no order as to costs as between the 1st Defendant and the 1st Third Party; and

(3) any previous costs order as between the 1st Defendant and the 1st Third Party be waived."

I also made a consent order embodying those terms. Accordingly, all that remains for adjudication is Golden Bell's claim against Sung Wah for an indemnity or contribution.

7. As to the cause of the fire which broke out at Golden Bell's factory, the following is common ground between Golden Bell and Sung Wah. The fire broke out because combustible material stored in Golden Bell's factory had been ignited by molten droplets created by electrical welding done by Mr Siu Kit Keung, the proprietor of Siu Keung Kee, in the course of dismantling a metal rack attached to the external wall outside Golden Bell's factory where it opens on to the light well of the building.

8. Golden Bell's case is essentially that Mr Siu was negligent by causing or allowing molten droplets to enter Golden Bell's factory through a window to ignite combustible materials therein, and that Mr Siu was dismantling the rack as Sung Wah's agent, so that Sung Wah is responsible for the consequences of his negligence. On that basis, Golden Bell claims against Sung Wah for $190,000 as an indemnity against what Golden Bell has to pay the plaintiff.

9. Sung Wah says that Golden Bell is not entitled to anything from it or, alternatively, at the most to $125,000 because only that much of the $190,000 due to the plaintiff under the settlement comes from Golden Bell, the other $65,000 coming from the Incorporated Owners. As to why it says that Golden Bell is not entitled to anything from it, Sung Wah takes two main points: one of law and the other on the facts.

10. The point of law is as follows. Golden Bell's case that Mr Siu was Sung Wah's agent is inconsistent with the position adopted by Golden Bell in entering into the settlement. Sung Wah says that the plaintiff would not be entitled to anything at all from Golden Bell if Mr Siu was Sung Wah's agent. Accordingly Sung Wah submits that Golden Bell is precluded from pursuing a case against it which is inconsistent with the position which Golden Bell adopted in settling with the plaintiff as it did.

11. Sung Wah's point on the facts is simply that Golden Bell has not proved its assertion that Mr Siu was Sung Wah's agent. If Sung Wah is right on its point on the facts, that would be the end of Golden Bell's claim for an indemnity or contribution from Sung Wah. I propose to go straight to that point on the facts, dealing with it by assuming without deciding that Golden Bell is not precluded by Sung Wah's point of law from contending that Mr Siu was Sung Wah's agent.

12. Mr Cheung Wah-dak, who was a director of Golden Bell and also the chairman of the Incorporated Owners at the material time, said in evidence that Mr Siu told him that the metal rack was obstructing the repainting of the external wall to which it was affixed, and asked whether he had any objection to its removal. Mr Cheung's evidence continued to the following effect. He told Mr Siu that he had no objection, and that it was up to Mr Siu to decide whether or not to remove the rack. Later Mr Siu told him that the metal rack had to be removed. And he permitted Mr Siu to enter Golden Bell's premises for the purpose of carrying out such removal.

13. Mr Siu's evidence differed from Mr Cheung's evidence. Mr Siu's evidence was to the following effect. There was an inspection of the works attended by himself, Mr Cheung and Mr Chou Shik Tong of Sung Wah. During the inspection Mr Cheung requested Mr Chou to remove the structures and articles in the light well, including the metal rack. Mr Chou agreed to this, and told Mr Cheung to get Mr Siu to fix it. Mr Siu was not clear as to whether Mr Cheung had made the request on behalf of Golden Bell or on behalf of the Incorporated Owners. Mr Siu complied because he got the instruction from Mr Chou. Mr Siu did not charge for the removal of the metal rack.

14. Having watched and listened to them giving evidence, I am impressed by Mr Siu as a reliable witness but am not impressed by Mr Cheung as a reliable witness. I find as a fact that Mr Siu did not tell Mr Cheung that the metal rack was obstructing the repainting of the external wall or ask Mr Cheung if he had any objection to its removal. I find as a fact that its removal was the result of Mr Cheung's request.

15. Beyond that, Mr Siu's evidence was somewhat vague. But the context is as follows. The removal was not part of the works contracted by the Incorporated Owners to Sung Wah or sub-contracted by Sung Wah to Mr Siu. The contractual relationships were: between the Incorporated Owners as employers and Sung Wah as main contractor; and between Sung Wah as main contractor and Mr Siu as sub-contractor. These were contractual relationships under which work was done for payment. Against that background, I am now concerned with work, i.e. the removal of the metal rack, not covered by either contract and done without any payment. The probability, in my assessment in the context of the case as a whole, is that such work of removal was not done under any relationship between any of the parties already in contractual relationships with each other, and that it was done only as a personal favour by Mr Siu to Mr Cheung even though it was a favour prompted by Mr Chou. At any rate, I do not find that Golden Bell has proved on balance what it has asserted, namely that it was done by Mr Siu as Sung Wah's agent. I do not find that proved on balance.

16. In these circumstances, it is unnecessary to decide the point of law raised by Sung Wah. Golden Bell's claim for an indemnity or contribution from Sung Wah fails on the facts, and is dismissed.

17. I should mention that during the trial, after Golden Bell had settled with the plaintiff, Sung Wah sought to strike out Golden Bell's claim for an indemnity or contribution from it i.e. Sung Wah by relying on the point of law. I did not consider it appropriate to deal with the matter by way of a mid-trial striking out application, and I left the point to be dealt with in my judgment at the end of the case if necessary. As it happens, it is not necessary. In making an order nisi as to costs, I do not propose to make any costs order in respect of the mid-trial striking out application or to allow it to affect the order nisi which I propose to make as to costs.

18. I dismiss Golden Bell's claim for an indemnity or contribution from Sung Wah, and I make an order nisi that Golden Bell pays Sung Wah's costs.