Leetex Enterprise Ltd v. Ip Kwok Hung

DCCJ 1879/2018

[2023] HKDC 152

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1879 OF 2018

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Before:  Master Roberta Chan in Court

Date of Hearing:  30 January 2023

Date of Assessment of Damages:  3 February 2023

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ASSESSMENT OF DAMAGES

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Background

1.The plaintiff was the registered owner of a private car bearing registration no RX7154. The defendant was the registered owner of a private car no SF2728.

2.At about 00:10 hours on 18 August 2016, at San Tin Highway slip road near Chainage 31.9(B) Lok Ma Chau, New Territories, the plaintiff’s car was hit and damaged by the defendant's car (the “Accident”).

3.As a result of the Accident, the defendant was convicted of (a) careless driving; (b) driving a motor vehicle with alcohol concentration in blood above the prescribed level; and (c) using a vehicle without third party insurance on 7 December 2016.

4.By a writ of summons issued on 4 May 2018, the plaintiff issued these proceedings to recover loss and damage arising from the Accident.

5.No notice of intention to defend was filed by the defendant and on 28 October 2020, interlocutory judgment was entered in favour of the plaintiff against the defendant with damages to be assessed.

The Hearing

6.At the hearing of the assessment of damages, the defendant was absent. However, the plaintiff’s solicitors confirmed by way of affirmation of service filed on 27 January 2023 that they have informed the defendant of the directions made by Madam Registrar M Soong on 11 November 2022 (the “Directions”) which sets out the date, time and venue for the hearing of the assessment of damages.

7.The plaintiff’s solicitors have also served on the defendant, among other documents, the plaintiff’s hearing bundles for assessment of damages (the “Hearing Bundles”), opening submissions and list of authorities. The Hearing Bundles contain the witness statement of Mr Ng Wai Yuen (“Mr Ng”), Claims Officer of Allianz Global Corporate & Specialty SE Hong Kong Branch, a motor survey report dated 9 September 2016 (the “Report”) prepared by Mr Lam Siu Hung, Anthony (“Mr Lam”) of Adjusting Services (Motor) Limited (the “Motor Surveyor”).

8.Given the defendant took no interest in these proceedings from the beginning, I directed that the hearing for assessment of damages should proceed.

The Evidence

9.At the hearing, the plaintiff called two witnesses, namely, Mr Ng and Mr Lam.

10.Mr Ng was called by the plaintiff to give evidence and he adopted the contents of his witness statement as part of his evidence. Mr Ng basically adopted the witness statement of Ms Lo Sau Lai (“Ms Lo”), his ex-colleague who has left Allianz, filed in these proceedings dated 14 January 2021.

11.According to Ms Lo, on the day of the Accident, the plaintiff’s car was insured with Allianz under a policy of insurance (the “Policy”).

12.After the Accident, the plaintiff’s car was towed away from the scene by a towing company called 人字拖車有限公司. This is supported by an invoice and a receipt issued by the towing company in the sum of HK$1,300. On 23 August 2016, the plaintiff's car was then towed by Fortune Towing Limited to BMW Concessionaries (HK) Limited (“BMW Concessionaries”) to assess the cost of repair. This is supported by an invoice issued by Fortune Towing Limited in the sum of HK$650.

13.Allianz instructed the Motor Surveyor to inspect the plaintiff’s car on 29 August 2016 to assess its reasonable repair costs. The Motor Surveyor reported back to Allianz on 9 September 2016 that the car was damaged beyond any economical repairs and advised that it be written off.

14.With the consent of Allianz, the plaintiff’s car was sold to Wing Hop Motor Engineering Co for HK$110,000.

15.The plaintiff was compensated by Allianz and signed a discharged form subrogating all its rights to Allianz.

16.Mr Ng supplemented the following, inter alia, at the witness box:-

a.  Mr Lam did inform Allianz of the preliminary assessment made by BMW Concessionaries (i.e. a total loss situation as described by BMW Concessionaries);

b.  The plaintiff did prefer (and in fact insisted) to have BMW Concessionaries to repair the damaged car as the car was rather new at the time of the Accident;

c.  If the plaintiff so insisted, Allianz would not be in a position to recommend or persuade the plaintiff to go to other garages for repair even if the cost might be lower;

d.  In the circumstances, Allianz did not ask for quotations from other garages on the repair costs for the plaintiff's car;

e.  It is the practice of BMW Concessionaries that if a vehicle is in a total loss situation, it would only "charge" the administrative fees for handling the insurance claim (like in this case in the sum of HK$5,300).

f.  If a vehicle can be repaired, then BMW Concessionaries will normally provide a written quotation on repair costs and the administrative costs for handling insurance claim will then be absorbed in the said quotation.

g.  It is the normal practice that Allianz will obtain the scrap value from other scrap buyers. In this case, Allianz managed to secure a much higher scrap value from Wing Hop Engineering Co who offered HK$110,000 for the plaintiff's car.

17.Mr Lam was called and adopted the contents of the Report as his evidence-in-chief. Further, Mr Lam gave the following oral evidence upon the enquiries made by this Court:

a.  The plaintiff's car was sent to the BMW Concessionaires for assessment of repair after the Accident.

b.  It is the practice of BMW Concessionaries that if a damaged vehicle is in a total loss situation (ie. the repair cost is higher than the cost of the pre-accident value of the vehicle), the staff will normally give the appointed loss adjuster a call to inform them of the same. If a written quotation to such effect is required, BMW Concessionaires will charge 10% of the repair costs. It is usual that the insurer will not be prepared to incur such cost in obtaining the written quotation in a total loss situation.

c.  In this case, Mr Lam confirmed that he or his colleague had received such an oral message from BMW Concessionaries. He recalled that BMW Concessionaries mentioned that the repair costs of the plaintiff's car would be more than HK$300,000, which was more than the insured amount of the plaintiff's car.

d.  Mr Lam explained that he did not record such oral conversation in the Report because it was all “oral” and it was his practice not to put it “on record”.

e.  Mr Lam did obtain quotations from 1 or 2 garages. He recalled the cost of repair of the plaintiff's car was in the region of HK$270,000 to HK$280,000. Again, as the quotations were obtained orally, he also did not see fit to record them in the Report.

f.  In light of (c) and (e) above, and given that the current market value of the same model and year of manufacture vehicle immediately before the Accident was estimated to be HK$250,000 to HK$270,000, he therefore opined that “the insured vehicle was so seriously damaged that it would be beyond any economical repairs.”

18.According to the Report, a total loss settlement was recommended. It was estimated, inter alia, that (a) the pre-accident value of the plaintiff's car was to be HK$250,000 to HK$270,000; and (b) the scrap value was HK$10,000.

19.Allianz accepted the recommendation by the Motor Surveyor that it was a total loss situation and adopted the median figure of HK$260,000 as the market value of the plaintiff's car. After deducting the excess of HK$4,000 under the Policy, Allianz paid a sum of HK$256,000 to the plaintiff. The plaintiff therefore signed a discharge form to subrogate all its rights to Allianz.

20.Allianz, in the name of the plaintiff, now claims a total sum of HK$158,362 plus interest and costs from the defendant as loss and damage suffered as a result of the Accident. The breakdown of the claims is as follows:-

(a)  Total loss of the plaintiff's car (net of scrap value of HK$110,000): HK$150,000 (HK$260,000-HK$110,000)

(b)  Towing fees: HK$2,090;

(c)  Motor survey fee: HK$850;

(d)  Search fee: HK$90

(e)  Handling charge: HK$5,300

(f)  Photocopying charges to HK Police: HK$32

21.With regard to paragraph 20(d), the search fee of HK$90 was incurred in relation to the vehicle registration searches made at the Transport Department.

22.As to paragraph 20(e), it was the handling charge paid to BMW Concessionaires for the administration of the insurance claim (see para 16(e) above). The copying charge of HK$32 in paragraph 20(f) was in relation to the court search made by Allianz at the Fanling Magistrates Courts on 1 November 2017.

Legal principles

23.As stated by the learned editors of McGregor on Damages, 21^st ed., §37-004:

“The cost of repair is, however, appropriate only if in the circumstances it is reasonable for the claimant to effect the repair; it might be cheaper to buy a replacement on the market and sell the damaged item for what it will fetch or the claimant might have intended to sell the damaged item and the reduction in market price from the damage is less than the cost of repair …”

24.In Darbishire v Warran [1963] 1 WLR 1067 at 1071, Harman LJ stated:

“The principle is that of restitutio in integrum, that is to say, to put the plaintiff in the same position as though the damage had not happened. It has come to be settled that in general the measure of damage is the cost of repairing the damaged article; but there is an exception if it can be proved that the cost of repairs greatly exceeds the value in the market of the damaged article. This arises out of the plaintiff's duty to minimise his damages. Were it otherwise it would be more profitable to destroy the plaintiff's article than to damage it. In the latter cases the measure is the value of the article in the market and this, of course, supposes that there is a market in which the article can be bought. If there is none, then the cost of repairs may still be claimed …” (emphasis added)

Discussion

25.The question that I have to consider is whether it was reasonable for the plaintiff to scrap the car and claim for its market price at the time of the Accident in the circumstances of this case.

26.Mr Chan for the plaintiff accepts that Mr Lam did not deal with the repair costs in the Report. Mr Chan also accepts that the plaintiff has not even considered this important factor until this Court made enquires with Mr Lam at the hearing.

27.The plaintiff's car was a 2013 BMW 520IA model. At the time of the Accident, it had been used for 3 years only. The mileage of the car was only 50,208 km though the plaintiff was the fifth owner. According to the Report, the pre-accident market value of the car was HK$250,000 to HK$270,000. From the pictures annexed to the Report, it appears that the right rear of the plaintiff's car was seriously damaged. The damage was more than cosmetic. The Report also stated that, inter alia, the rear roof panel, rear pillar, rear panel, rear lower arm, rear member, rear absorber, rear wheel hub and the rear wheel were also damaged.

28.I have doubt whether Mr Lam can still remember so clearly the “oral quotations” obtained from other garages (i.e. HK$270,000 to HK$280,000) more than 6 years ago. Putting aside whether Mr Lam did in fact obtain quotations from other garages, I do find that the damage caused to the plaintiff’s car was very serious and the cost of repair must be substantial. As stated above, the damage was more than cosmetic and the damaged car could only be sold for HK$110,000. I also take note of the fact that BMW Concessionaries stated in its invoice dated 27 September 2016 that the plaintiff’s car was a “Total Loss”. If it was worthwhile to repair the car, I have no doubt that BMW Concessionaires would rather have it repaired than reporting that it was a total loss. Finally, I also take into account that after the car was sold to Wing Hop Motor Engineering Co, the registration of the car was cancelled and it was marked on the Vehicle Registration Document “Total Loss Claim Noted”.

29.On a balance of probabilities, I find that the cost of repair of the plaintiff’s car is more than its pre-accident market value. I therefore accept the plaintiff’s claim for the total loss of its car assessed at HK$150,000.

30.In the future, a plaintiff would be well advised to consider adducing written quotations on the cost of repair of the damaged vehicle. Failure to do so might result in the Court drawing adverse inference against him.

31.I also accept the plaintiff is entitled to the Motor Survey fee and the handling charge as claimed (see paragraphs 20(c) and 22 above). They are supported by the relevant receipts.

32.As to the towing fees, as stated in paragraph 12 above, the relevant receipts show that only HK$1,300 and HK$650 have been paid by the plaintiff. I do not understand why the defendant should be liable to pay any “service fee” in the sum of HK$140. I will therefore award the plaintiff HK$1,950 for the towing fees.

33.However, I am not satisfied that, technically, the plaintiff’s damages should include (a) the fee for the vehicle registration search of the defendant’s and its vehicles; and (b) the photocopying charges paid to the Police. The searches were obtained for the purpose of the present claim against the defendant and the fee should form part of the plaintiff’s costs to be taxed but not part of its special damages.

Conclusion

34.I shall enter final judgment for the plaintiff against the defendant in the sum of HK$158,100 with breakdown as follows:-

(a)  Total loss of the plaintiff's car: HK$150,000

(b)  Towing fee: HK$1,950;

(c)  Motor survey fee: HK$850;

(d)  Handling charge: HK$5,300.

35.I shall award interest on the sum of HK$158,100 at the best lending rate of HSBC from 24 November 2016 (i.e. after Allianz has received the sale proceeds of the plaintiff's car) to the date of this judgment and thereafter at judgment rate until payment.

36.There is no reason why costs should not follow event. The defendant shall pay the plaintiff’s costs of the action including the costs of the Assessment of Damages (and all costs reserved orders) on party and party basis, to be taxed if not agreed.

Mr Lewis Chan of Winnie Leung & Co, for the plaintiff

The defendant was not represented and did not appear