SUN CHEONG PAPER LTD v. CHIVAS GODOWN CO LTD

DCCJ 1729/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1729 OF 2007

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J U D G M E N T

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Background

1.  These proceedings are commenced by the Plaintiff ("Sun Cheong") against the Defendant ("Chivas"), for recovery of employees’ compensation paid by Sun Cheong to its employee, Mr. Lai Wing Kit ("Mr. Lai").  The amount claimed is $172,968.86, representing $34,154.86 as employees' compensation paid to Mr. Lai, $27,236 as Mr. Lai's costs in DCEC 1220 of 2006 ("EC Action") instituted against Sun Cheong, and $111,578 as Sun Cheong's legal costs incurred in defending the EC Action.  The claim is made pursuant to s.25(1)(b) of the Employees' Compensation Ordinance ("Ordinance"), and altentatively, pursuant to s.3 of the Civil Liability (Contribution) Ordinance.

2.  Sun Cheong carries on the business of trading in paper, and let the entire 4th floor of Chivas Godown ("Building") in Chai Wan from Chivas, the owner and landlord of the Building. A tenancy agreement was made between Chivas and Sun Cheong on 14 January 2005 ("Tenancy Agreement"), whereby the entire 4th floor was let to Sun Cheong, with the right on the part of Sun Cheong to park its vehicles at Lorry Parking Spaces Nos. C and D on the Ground Floor of the Building.

3.    Mr. Lai was employed by Sun Cheong as a vehicle attendant and delivery worker. His job duties included the loading of goods from Sun Cheong's godown in the Building onto lorries and delivering such goods to Sun Cheong's clients.  On 19 April 2006, Mr. Lai was working on the Ground Floor of the Building, in the course of collecting and loading goods for delivery.  He went to a toilet normally used by visitors or tenants on the Ground Floor of the Building ("Toilet").  As he was leaving the Toilet, he slipped and fell down a flight of stairs leading from the entrance of the Toilet to the ground level ("Staircase"), and sustained injuries. 

4.  Mr. Lai commenced the EC Action against Sun Cheong, which was settled by Sun Cheong's payment to Mr. Lai of a sum of $34,154.86, and $27,236 as Mr. Lai's legal costs.  Having paid these amounts, Sun Cheong now seeks to recover them from Chivas, on the basis that as the occupier in control of the Building, the Toilet and the Staircase, Chivas was negligent and that such negligence had solely caused Mr. Lai's injuries.  It is claimed that the Toilet and the Staircase were wet, slippery, and inherently dangerous.

5.  In its Defence, Chivas denies that Mr. Lai and Sun Cheong's employees had the authority to use parts of the Building not leased to Sun Cheong, which would include the Toilet.  It denies that the accident was caused by Chivas' negligence or breach of duties.  Chivas also claims that if the Toilet was slippery, wet and inherently dangerous as claimed, Sun Cheong as Mr. Lai's employer was negligent in authorizing Mr. Lai to use the Staircase and the Toilet. 

6.  Chivas further alleges that under clause 22 of the Tenancy Agreement, Chivas is not liable for any damage or injury sustained by Sun Cheong or any other person caused by or owing to any defect in, or failure or breakdown of any of the services and facilities provided for the use and enjoyment of Sun Cheong under the Tenancy Agreement. 

7.  Finally, Chivas claims that Mr. Lai's injuries were caused wholly or contributed to by his own negligence. 

8.  By the time Closing Submissions were made, Counsel for Chivas conceded that Mr. Lai was a lawful visitor to the Ground Floor of the Building and to the Toilet.  I fail to see how it can be maintained otherwise.

Issues

9.  The issues which arose for determination at trial in these proceedings are :

(1)  whether Chivas was the occupier of the Toilet and the Staircase;

(2)  whether Mr. Lai's injuries were caused by the negligence or breach of duties on the part of Chivas;

(3)  whether Mr. Lai's injuries were caused by any negligence on the part of Sun Cheong;

(4)  whether Mr. Lai was contributorily negligent;

(5)  whether Chivas can rely on Clause 22 of the Tenancy Agreement to exclude its liability to Sun Cheong; and

(6)  the amount recoverable by Sun Cheong from Chivas.

(1) Whether Chivas was the occupier of the Toilet and the Staircase

10.  Chivas admits that it was the landlord and occupier, and had control, of the Building, but claims in its Defence that it did not occupy and had no control of the parts of the building leased to its tenants.  There is no evidence that the Toilet was leased to any tenant for its exclusive use.  On the contrary, the evidence is that the Toilet was situated on the Ground Floor in the carpark of the Building, and not being locked as it did not even have a door, was available for and open to use by any visitor to the Ground Floor of the Building and to the carpark.

11.    As the Building is essentially leased out by Chivas for use as a godown, it can be envisaged that the carpark on the Ground Floor will be frequently used by tenants and persons such as Mr. Lai whose work was to load and unload goods from vehicles and lorries parked there.  At the material time of the accident, Chivas employed its own workers to clean and maintain the Toilet.  There is no evidence to dispute Sun Cheong's averment that Chivas is also responsible for the management of the Building, which I take to include its common parts.  As the owner of the Building and the carpark on the Ground Floor, Chivas is clearly the occupier of the Toilet.  In my judgment, Chivas clearly had the necessary occupational control of the Toilet and the Staircase, which has been established to mean "control associated with and arising from presence in and use of or activity in the premises" (Wheat v. E. Lacon & Co Ltd. [1966] A.C. 552).  As occupier, Chivas owed a duty to visitors to the Toilet such as Mr. Lai to take reasonable care and in respect of dangers due to the state of the Toilet and the Staircase.

(2) Whether Mr. Lai's injuries were caused by the negligence or breach of duties on the part of Chivas

12.  According to Mr. Lai, he went to the Toilet at about 9:30 a.m. on 19 April 2006, in the course of carrying out loading and unloading work on the Ground Floor of the Building.  After using the Toilet, he was at the doorway of the Toilet, and was going down the Staircase, when he slipped on the wet steps and fell to the bottom of the Staircase, landing on his buttocks on the ground.  Mr. Lai said that he could no longer recall the exact spot on the Staircase where he had slipped, but that it was somewhere in the middle of the Staircase.  According to Mr. Lai, the tiles on the Staircase were smooth and very slippery when wet.  He had noticed before the fall that the entire Staircase had water stains, and he described the condition as similar to the situation when someone had used a hose to spray water on the tiles, without drying the surface of the tiles, or as similar to the situation when someone had just washed the floor surface.  He said that he could feel that the floor surface was wet as soon as he stepped on the tiles.

13.  Mr. Lai's evidence is that the situation of the doorway in the Toilet and of the Staircase was made worse by the poor lighting.  There was only a dim florescent light tube on the wall, and the ceiling of the carpark was very high.  According to Mr. Lai, he had already taken care on seeing the wet surface, and had put his hand on the railing on the left of the doorway as he commenced to go down the Staircase.  Despite this, the wet and slippery tiles caused him to slip and his hand on the rail did not prevent him from falling all the way down to the bottom of the Staircase.  Mr. Lai said that part of the reason was because the depth of each step on the Staircase was very small.

14.  Mr. Chung Lok Wah was Mr. Lai's direct superior in relation to his work in the carpark.  Mr. Chung confirmed that the lighting around the Staircase was insufficient, and that as the Building wasan old one, the edges of the tiles on the Staircase had become smooth and slippery by wear and tear.  According to Mr. Chung, and this can be seen from the photographs adduced in evidence at trial, there was a large washbasin against the wall at the foot of the Staircase. From the photographs, it can be seen that washing liquids were placed beside the washbasin.  Mr. Chung's evidence is that people wash their hands at this basin, which contributed to the dampness of the Staircase as well as the area around it.  According to Mr. Chung, a turtle was kept in the space between the wall adjacent to the Toilet doorway and the washbasin.  Mr. Chung's evidence is that the turtle was cleaned by means of someone spraying water from the washbasin onto the turtle, and this method of washing also caused water to be splashed onto the Staircase.  Mr. Chung confirmed that he had to take care when he used the Toilet, as the floor was usually wet.  He also confirmed that the steps are not deep and one has to take care when going down the Staircase.

15.  On the evidence, I accept Mr. Lai's evidence that he had slipped and fallen as a result of the wet and slippery tiles on the Staircase.  I am also satisfied from the evidence that as owner and occupier in control of the Toilet on the Ground Floor of the Building, it is reasonably foreseeable by Chivas that the Toilet would be used by visitors to the Building, including tenants of the Building, their workers, and licensed users of the car parking spaces on the Ground Floor of the Building, such as Mr. Lai. It is therefore reasonably foreseeable by Chivas that a visitor to the Toilet would suffer damage as a result of the wet floor and poor maintenance of the Toilet and the Staircase leading to the Toilet.  From the evidence, it should be clear to Chivas that the ground and the Staircase near the large washbasin at the foot of the Staircase would likely be made wet as a result of people washing and using the washbasin.  Such use extends to the method adopted for the cleaning of the turtle kept next to the Staircase.  The evidence from the Assistant Manager of Chivas is that Chivas was aware of the turtle being kept there.  Unless there is a system in place to keep the Toilet, the Staircase and the area around the washbasin clean and dry, Chivas falls short of its duty to take reasonable care, to see that visitors to the Toilet will be reasonably safe in using the Toilet and the Staircase.

16.  According to Chivas, the Toilet was cleaned once a day at about 4 p.m. by a worker of Chivas. No record was kept in respect of the cleaning of the Toilet.  There is a "wet floor" warning sign on the wall at the doorway permanently.  In all the circumstances, bearing in mind the nature of the use of the Building, the size of the carpark, the location of the washbasin near the Staircase, the unsatisfactory lighting at the Staircase, and the potential danger posed by the elevated entrance to the Toilet which can only be accessed by the 7 steps of the Staircase, I am not satisfied that Chivas has taken all reasonably practicable steps to ensure that visitors to the Toilet will be reasonably safe in using the Staircase.  Having the Toilet cleaned only once a day in the afternoon is not adequate, and the placing of a permanent sign on the wall at the entrance will not adequately warn users of the Toilet of the potential risks posed by the slippery tiles on the Staircase itself and inside the Toilet.  In any event, the warning sign is at the entrance of the Toilet, at the top of the Staircase, and is insufficient to warn visitors of the potential danger created by the wet, slippery and narrow steps on the Staircase itself. 

17.  Reasonable and practicable steps which could have been taken by Chivas to ensure the safety of users of the Toilet and the Staircase include, by way of example, cleaning the Toilet and the Staircase more regularly, drying the tiles on the floor in the Toilet and on the Staircase properly, providing better lighting, placing a sign at the bottom of the Staircase and in the vicinity of the washbasin whenever the Toilet and the Staircase are wet or slippery, using anti-slip tiles or an anti-slip mat, and improving the anti-slip features of the steps.

18.  I am satisfied, on a balance of probabilities, that Chivas was negligent and in breach of its duty of care and that such negligence caused Mr. Lai's injuries.

(3) Whether Mr. Lai's injuries were caused by any negligence on the part of Sun Cheong

19.  It was argued on behalf of Chivas that Sun Cheong was negligent in not overseeing Mr. Lai's safety at work, and by permitting its employees including Mr. Lai to use the Toilet. 

20.  Mr. Lai and the other vehicle attendants employed by Sun Cheong had to work on the Ground Floor of the Building.  It was natural and reasonable for them to use the Toilet. According to the evidence of Mr. Chung, Mr. Lai's direct superior on the Ground Floor, the condition of the Toilet was wet, but to him, it was similar to the condition of any other public toilet.  He had not considered that it was inherently dangerous.

21.  Chivas called Sun Cheong's operations manager, Mr. Lee, to give evidence.  According to Mr. Lee, he had never visited the Toilet.  He had given instructions to Sun Cheong's employees on safety measures generally, without any specific reference to safety measures in using the Toilet.  He accepted that if the Toilet was inherently dangerous, he would not permit Sun Cheong's employees to use it.  There is no evidence that Mr. Lee had received any complaint about the condition of the Toilet.

22.  On the evidence available, I do not agree that in permitting Mr. Lai and its other employees to use the Toilet on the Ground Floor of the Building, Sun Cheong can be said to be negligent or failing its duty to provide a safe system or place of work.  There is no evidence that Mr. Lai and his colleagues were not permitted to use the toilet on the 4th floor, such that they had no alternative but to use the Toilet, despite its wet and slippery condition. The Toilet was not within the responsibility of Sun Cheong to clean and maintain.  It was not made aware of the Toilet being an inherently dangerous structure or facility.  It would hence be unreasonable to require Sun Cheong to prohibit its employees from using the Toilet.  There is insufficient evidence before me to find that Sun Cheong should have been aware that the Staircase and the Toilet was in such an inherently dangerous condition or state as to warrant their taking any positive action, whether to complain to Chivas, or to warn its employees not to use the Toilet.  As Mr. Chung described in his evidence, the Toilet was just another public toilet.  However, the fact that the Toilet was not in such a state as to constitute an inherently dangerous facility does not mean that Chivas was not negligent in failing to take reasonable and practicable steps to properly clean and maintain it, such as the steps identified in paragraph 17 of my Judgment.

23.  There is no evidence that the accident took place in a factory or any other notifiable workplace as defined in the Factories and Industrial Undertakings Ordinance ("Cap. 59").  As such, I fail to see how s.37 of Cap. 59 is applicable to Sun Cheong.

(4)  Whether Mr. Lai was contributorily negligent

24.  I am satisfied, on the evidence, that Mr. Lai was not contributorily negligent.  Seeing water stains and feeling the wet floor surface when he stepped on the tiles, Mr. Lai's evidence is that he had already put his left hand on the railing as he commenced his way down the Staircase.  He said that he nevertheless slipped and fell, because the old tiles were too slippery, and despite having his hand on the railing, he was not able to avoid or arrest the fall.  I do not regard this to be incredible, particularly when the steps are shallow and the tiles are very slippery.  Accidents occur suddenly, and it is very possible that in the instant when the slip occurred, Mr. Lai was not able to tighten his left hand or to hold on to the railing in time to arrest his fall to the bottom of the Staircase.  On the evidence, I cannot find anything to support Counsel's submission that Mr. Lai did not care about his own safety by using the Toilet.

(5) Whether Chivas can rely on Clause 22 of the Tenancy Agreement to exclude its liability to Sun Cheong

25.    Chivas claims that it is not liable to indemnify Sun Cheong in respect of the damages paid by Sun Cheong, by virtue of Clause 22 of the Tenancy Agreement, which provides as follows :

"The Landlord shall not in any circumstances be liable to the Tenant or any other person whomsoever in respect of any loss damage or injury to person or property sustained by the Tenant or any other person caused by or through or in any way owing to :

(a)  any defect in, or failure or breakdown of any of the services and facilities (insofar the same are provided for the use and enjoyment by the Tenant under the Agreement herein ) for any reason whatsoever including negligent or wrongful acts or omissions by independent contractors, or,

(b)  any failure, malfunction or suspension of the supply of water, electricity, lifts, escalator, fire warning and fire apparatus and installations or other utility or service to or provided in the Building or the Premises for any reason whatsoever …"

26.  First, I accept the submission of Counsel for Sun Cheong that the clause must be construed strictly against Chivas which seeks to rely on the clause under the contra proferendum rule. 

27.  The damages paid by Sun Cheong to Mr. Lai and therefore the loss sustained by Sun Cheong was caused by the presence of water on the Staircase which rendered it slippery.  I do not regard the wet and slippery condition of the Staircase to be a "failure, malfunction or suspension" of a utility or service to or provided in the Building or the 4th floor let to Sun Cheong, within the meaning of Clause 22(b) of the Tenancy Agreement.

28.  Even if Clause 22(a) can be wide enough to extend to the wet  condition of and hence defect in the Staircase, the exemption under Clause 22 cannot be enforced by Chivas by virtue of the provisions of s.7(1) of the Control of Exemption Clauses Ordinance ("Cap.71").  This provides that a person cannot by reference to any contract term exclude or restrict his liability for personal injury resulting from negligence.  Further, under s.7(2) of Cap.71, in the case of other loss or damage, a person cannot exclude or restrict his liability for negligence except insofar as the contract term satisfies the requirement of reasonableness.  In the circumstances of this case, I do not regard Clause 22 to be reasonable, in purporting to exclude liability caused by Chivas' negligence in the maintenance of the Toilet and the Staircase, which caused physical injuries to an employee of the tenant, Sun Cheong, lawfully using the Toilet in the Building.

29.  Counsel for Chivas argued that s.7 of Cap. 71 does not apply to control Clause 22 of the Tenancy Agreement, which relates to the creation or transfer of an interest in land under Schedule 1 of Cap. 71.  I do not accept that the exclusion of liability provisions of Clause 22 are at all related to the creation of an interest in land under the Tenancy Agreement to fall within the exemption under Schedule 1.  Further, as Counsel for Sun Cheong pointed out, Mr. Lai's and Sun Cheong's right to use the Toilet and the Staircase arise under a bare licence, and not under any contract for the creation or transfer of any interest in land.

(6) The amount recoverable by Sun Cheong from Chivas

30.  Having found that Sun Cheong is not liable in negligence for the accident which caused Mr. Lai's injuries, Sun Cheong is entitled under s.25(1)(b) of the Ordinance to seek a full indemnity from Chivas in respect of "any sum which (it) is obliged to pay" as a result of the accident.  This covers not only the employees' compensation, but also the costs incurred by Mr. Lai in the EC Action, as well as the costs incurred by Sun Cheong in defending the EC Action (Wong Yat Chiu v. Chan Kwok Wa [1999] 2 HKLRD 849; Yardway Motors Ltd. v. Tam Siu Lun [2005] 2 HKLRD 118).

31.  As I have also found that Mr. Lai is not contributorily negligent, the arguments made by counsel in relation to the limitation of the recovery under s. 27 of the Ordinance need not be dealt with.

32.  I am satisfied that the further injuries sustained by Mr. Lai in June and July 2006, after he returned to his work, were triggered and caused by the original injury he sustained in April 2006.  I am not satisfied that there is any "supervening event", as argued by Counsel for Chivas.  It is reasonable for Mr. Lai to return to remunerative work after the expiry of the initial period of his sick leave, and I do not accept that he was negligent in so doing.

33.  Chivas sought to argue that it had, in January 2008, paid to Mr. Lai a sum of $35,000 in full in final settlement of Mr. Lai's claims against Chivas in respect of Mr. Lai's personal injury sustained as a result of the accident.  Chivas seeks to deduct the amount paid from any amount payable to Sun Cheong in these proceedings. 

34.  According to the Release dated 2 February 2008 ("Release") signed by Mr. Lai in favor of Chivas, Mr. Lai received the amount of $35,000 and costs of $22,725 in full and final settlement of Mr. Lai's claims against Chivas in relation to the accident.  Mr. Lai acknowledged in the Release that he discharged Chivas from all liabilities in relation to the accident, and confirmed that he would not make further claims against Chivas. 

35.  The Release was preceded by without prejudice correspondence exchanged between Chivas' solicitors and the solicitors acting for Mr. Lai in Mr. Lai's claims against Chivas.  By a letter dated 15 January 2008, Chivas through its solicitors offered to pay $35,000 to Mr. Lai "in full and final settlement".  I can see nothing in this offer, nor in the Release, which provides for Chivas' payment to Mr. Lai to be in settlement of any liability which Chivas may have, as against Sun Cheong.  On construction of the Release, there is no provision whereby Mr. Lai is to indemnify Chivas in the event of any further payment to be made by Chivas to Sun Cheong in relation to the accident.  The Release deals solely with the rights and liabilities arising between Mr. Lai and Chivas.

36.  Further, as evidenced by the without prejudice letter dated 20 December 2007 from Mr. Lai's solicitors to Chivas' solicitors, Mr. Lai had made known to Chivas' solicitors that the $120,000 first proposed by Mr. Lai by way of settlement was to be accepted "on top of" the employees’ compensation received from his employer, Sun Cheong. Chivas' eventual offer to settle Mr. Lai's claims against Chivas by payment of the sum of $35,000 in full and final settlement followed from this letter of 20 December 2007.  Having known about Mr. Lai's receipt of employees' compensation from Sun Cheong, and that Mr. Lai's proposed settlement with Chivas is to be in addition to the employees' compensation he received, I fail to see how Chivas can now argue that it is unfair not to deduct the employees’ compensation from the award to be made in favour of Sun Cheong in these proceedings.

Award

37.  Chivas is to pay to Sun Cheong the total sum of $172,968.86, together with interest, as claimed.

38.    I will make an order nisi that Chivas is to pay to Sun Cheong the costs of the action, to be taxed if not agreed, with certificate for Counsel.