Always Win Ltd. v. Autofit Ltd. and Citybase Property Management Ltd. (Third Party)

HCA010735/1993

1993, No.A10735

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram : The Hon. Mr Justice Cheung in Court

Dates of hearing : 28, 29, 30 November 1994, 1, 2, 5,
                   6, 7 and 9 December 1994

Date of delivery of judgment : 28 March 1995

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J U D G M E N

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Facts

1. The Plaintiff was the registered owner of a BMW vehicle ("the BMW"). The Defendant was engaged in the business of a car repairer. The Third Party was the manager of a building called the Guardforce Building ("the Building") in which the Defendant had its workshop. The Defendant parked the vehicles entrusted to it by its customers for repair in the basement carpark of the Building.

2. On 27th July 1993, Mr Choi Yu Ming ("Mr Choi"), a director of the Plaintiff delivered the BMW to the Defendant for repair. On 10th August 1993, he was informed by the Defendant that the BMW had been repaired and he took delivery of it from the Defendant. After he had taken delivery of the BMW he discovered that the gear-stick of the BMW was wrongly fixed and the tyres were not balanced. On 17th August 1993, he re-delivered the BMW to the Defendant for repair. Some repair work was done to the BMW on the same day. At about 2:30 p.m. on 18th August 1993, a technician of the Defendant completed the rest of the repair to the BMW. The BMW was parked at the lower ground floor of the carpark of the Building. He shut all the windows, locked all the doors, put the gear-lever lock into operation and turned on the car's alarm system with the remote control before leaving. He returned the keys of the BMW to the Defendant's office.

3. At about 9:15 p.m. of the same day, a private car with registration number FJ9583 arrived at the entrance of the carpark. Mr Cheung, a caretaker employed by the Third Party, approached the car and asked the driver for the purpose of his entrance. The driver replied that he was a staff of the Defendant. When a colleague of Mr Cheung was about to issue an In/Out Permit to the driver, the driver told the colleague of Mr Cheung that he did not require such a permit as he was going to stay for a very short while and would be back soon. At that time an In/Out permit system was implemented by the Third Party, all incoming vehicles must obtain a permit from the caretaker at the entrance before entering the carpark and upon leaving, the driver must surrender the same permit to the caretaker.

4. Mr Cheung pressed a button to lift up the mechanical bar at the entrance of the carpark and allowed the car to enter into the carpark. He noticed that, apart from the driver, there was also a front-seat passenger in the car. About 10 to 15 minutes later, he saw this car came up from the basement and the driver stopped the car in front of the bar. Mr Cheung recognised him to be the one who drove the car just a while ago. He warned the driver that he must get the In/Out permit when entering the carpark in the future. The driver apologised. After that, Mr Cheung pressed the button to lift up the bar to allow the car to leave. When the bar was being raised, Mr Cheung heard the noise of a vehicle coming up the ramp from the basement. He then saw the BMW moving up the ramp at high speed. Seeing that it was impossible for him to lower the bar before the BMW arrived at the exit, he approached the BMW and hand-signalled the driver to stop and to surrender the In/Out permit. The driver of the BMW ignored his hand-signal and did not stop or surrender the permit. Instead, he accelerated and forced his way out of the carpark. Mr Cheung immediately ran out of the carpark and chased after the two cars. He saw the two cars in front of the traffic light and he managed to catch up with the BMW. He knocked on the door of the BMW and demanded the driver to surrender the permit. The driver, however, drove the BMW onto the pavement and fled. The BMW was never recovered.

5. The Plaintiff is claiming against the Defendant the sum of $499,400 being the value of the BMW. The BMW was valued at $510,000 with full option and in a good condition. The evidence revealed that the car did not have a sun-roof which was worth $11,600, so that sum has to be deducted from the value of the car. The value of the car was not something that was challenged by the parties. The Defendant is seeking an indemnity and/or contribution from the Third Party in respect of the Plaintiff's claim.

The Plaintiff's claim against the Defendant : Bailment

6. The Plaintiff's claim against the Defendant is based on bailment. The duties of a bailee is set out in paragraph 1839, Halsbury's Laws of England, (4th Ed), Vol 2 : a custodian for reward must exercise reasonable care for the safety of the article entrusted to him. The standard of care and diligence imposed on the custodian is that demanded by the circumstances of the particular case. The precautions required of him may therefore be more exacting than those required of a gratuitous depository. The custodian is therefore bound to take reasonable care to see that the place in which the chattel is kept, and the tackle used in connection with it, are fit and proper for the purpose, to see that the chattel is in proper custody, to protect it against unexpected danger should there arise, to recover it if it is stolen, and to safeguard the bailor's interest against adverse claims. If the chattel is injured through his agents, he would not be excused on the ground that it has been subsequently destroyed by inevitable mischance. Apart from a special contract, the bailee is not an insurer and therefore in the absence of negligence on his part, he is not liable for the loss of or damage to the chattel due to some accident, fire, the acts of third parties, or the unauthorised acts of his servants acting outside the scope of the employment. But if he entrusts the duty to take care of the chattel to a servant or agent, he is answerable for the manner in which that servant or agent, carries out his duty.

The Defence

7. The Defendant argued that it had discharged its duty as a bailee towards the Plaintiff : it had done all it could in the circumstances to protect the BMW. It had put the BMW in a safe carpark. The carpark had a 24 hours security service including gate control and patrolling inside the carpark. The roller shuttle of the carpark closed every night. The technician of the Defendant had used the remote control given by the Plaintiff to activate the alarm system of the BMW. He had checked all the doors of the BMW. There was a service vehicle belonging to the Defendant parked directly in front of the BMW and blocking it. That car was broke opened and removed on the night of the 18th August 1993 so that the BMW could be driven out from the carpark. The Defendant had treated the BMW as its own car. The senior management of the Defendant and its holding company also parked their own cars which were also of BMWs in the basement carpark. There were often Mercedes and BMWs belonging to the other owners parked in the carpark around the clock. There was a regular patrol every two hours by the Third Party which was the management company of the carpark. At 7:00 p.m. when the Defendant closed for business, the senior supervisor would go down to the carpark to ensure all the doors of the cars parked there by the Defendant were properly locked. Furthermore, it is said that alarms and safety measures would not be sufficient because these are items which could easily be removed or rendered inactive by the thieves in a short period of time.

Acts of Third Parties

8. The loss of the Plaintiff's BMW was caused by the theft carried out by third parties. The general rule at common law is that a person is not liable for the acts of an independent third party. In P. Perl (Exporters) Ltd. v. Camden London Borough Council [1984]1 QB 342, it was re-affirmed that even in circumstances where it was recognised that a defendant was liable for the acts of a third party because of a special relationship which imposed a duty on the defendant to exercise control on the third party causing the damage, there could be no exception to the rule unless there was a high degree of foreseeability that damage would occur as a result of the act or omission of the defendant.

9. In the present case, I am satisfied that the Defendant is liable to the Plaintiff for the loss of the BMW. There is a high degree of foreseeability that damage would occur as a result of the act or omission of the Defendant. The BMW would be stolen if the Defendant was negligent in providing adequate measures for its safe custody. I am satisfied that the Defendant is negligent as a bailee of the BMW.

10. It was argued by Mr Tim Kwok, Counsel for the Defendant, that the theft of vehicles in Hong Kong is such a unique situation that even the governments of Hong Kong and China could not resolve the problem. Viewed in that light, it was asked that what more could the Defendant have done in the circumstances of the case?

11. In this regard, one could do no better than repeat what Lord Pearson said in the case of British Road Services Ltd. v. Arthur V. Crutchley & Co. Ltd. Factory Guards Ltd. [1968]1 Ll.L.R.271 at page 283 :

"There were several other precautions which could have been taken, e.g., more frequent visits by the mobile patrolmen, static watchman not of the elderly type but young men provided by the third parties or a similar organization, guard dogs, an audible alarm or a silent alarm. There might have been a static watch on some nights but not always on the same nights in the week, and mobile patrolmen on the other nights. It appears from the evidence of Mr Pugh that none of these precautions could be relied on with certainty to prevent a theft by a determine and ingenious gang of thieves. A watchman can be overpowered, a guard dog can be killed, an audible alarm can be silenced and a silent alarm can be circumvented in some way. Also there would be some substantial intervals even between more frequent visits. But it does not follow that one must adopt a defeatist attitude of saying that such precautions are not worth taking. Additional precautions present the thieves with additional problems to be dealt with, so that they have more things that might go wrong, greater expenditure of time, more risks of detection and more risks of pursue and capture. In my opinion, the deterrent effect of additional precautions was not sufficiently taken into account in this case."

12. In that case, the plaintiffs delivered cases of whisky to the defendants' warehouse for final carriage to the docks. The whisky was transferred to trailer which was left uncovered in the warehouse until 4 p.m. when it was covered and motor unit was hitched to it. At some time between 3 am and 6 am on the next day, the whisky was stolen by thieves who broke in through the skylight in the roof and drove away the unit and trailer. The plaintiffs claimed against the defendants for negligence or breach of contract. The defendants denied liability and claimed indemnity or contribution from the third parties who were the employers of the security guards. It was held that the defendants' system of protection, though useful, was not proved to be adequate in relation to special risks involved in the nature and conduct of the defendants' business at the warehouses nor was it proved that inadequacy of the system was not a cause of theft and it was probable that if the system of protection had been adequate, thieves would not have chosen the defendants' warehouses. That accordingly, the defendants failed to discharge the burden of proving that loss was not caused by any negligence on their part and the defendants were held liable to the plaintiffs for damages.

13. In the present case I am satisfied that the Defendant was negligent in two regards. Firstly, it had failed to ensure that the system of protection was adequate. In June 1993, about two months before the theft of the BMW, there was another theft in the carpark of a Mercedes Benz car entrusted to the Defendant for repair. According to the evidence, apart from these two theft of vehicles, there was also theft of a car in the carpark although that car did not belong to customers of the Defendant. By August 1993, the theft of vehicles in Hong Kong was so prevalent that measures that would usually be regarded as sufficient could not be considered as adequate in the light of the prevailing situation.

14. No bailee is required to provide ideally safe conditions of storage. The duty of the bailee is to exercise reasonable care of the goods according to all the circumstances of the case. There could not be any doubt that BMW vehicles which were luxury cars had been the target of theft for a long time. How the Defendant chose to deal with its own cars was a different matter. The fact that senior officers of the Defendant also parked their luxury cars in the carpark is neither here nor there. We are concerned here with vehicles of other owners entrusted to the Defendant for repair. In my view, to leave the cars in the carpark after repair is not an adequate precaution in the circumstances of the case. First of all, inside the shop premises of the Defendant on the ground floor of the Building, there was an enclosed area in which repairs of the cars were carried out. The Defendant has not shown that on the evening in question, the BMW could only be kept in the carpark because of the lack of space at the enclosed garage. The burden of proof lies on the Defendant to show that it had exercised due care in relation to the BMW, not just the general details of the system.

15. Secondly precautions ought to be increased after the previous theft of the cars in the carpark and yet the general tenor of the evidence of the Defendant was that leaving the vehicles in the carpark with the doors locked, the alarms activated and relying on the security measures provided by the carpark were sufficient. It was said that the Defendant had taken all reasonable and practical measures it could have carried out in ensuring the safety of the car. It was said that the carpark entrance was guarded by four uniform security guards in day shifts and three uniform security guards overnight. The BMW was not visible from the street, the carpark in question was situated in an industrial building and it did not give any impression of having luxury cars being stored inside the carpark. It was submitted that even if the system was inadequate, the inadequacy of the system was not a cause of the theft of the BMW. It must be borne in mind that the carpark was situated in a building which was accessible by the occupants and the other users of that building. The evidence revealed that there was also an access to the carpark from the street level. The storage of luxury vehicles must be apparent to anyone who had the chance of using the Building. As for the security guards provided by the Third Party, it is apparent that the so-called security guards were elderly caretakers whose duties were to ensure an orderly entry and exit of vehicles into and out of the carpark.

16. In my view, the Defendant should arrange for additional patrols of the basement area of the carpark in which cars entrusted to it were parked. While the carpark was managed by the Third Party, if the Defendant chose to use the basement area, then it must ensure additional security system should be implemented. Additional lighting, short circuit video camera, use of wheel clamps, fencing or obstacles are some of the additional precautions that the Defendant should consider. If the Third Party was not prepared to implement the additional measures due to lack of fund or lack of approval from the management committee, then the Defendant must consider carrying out the additional measures by itself or arrange the cars to be parked in another carpark with these additional precautions. It was said that the car thieves are so sophisticated and determined that security devices such as wheel clamps or car alarms or lever locks were of no threat to the thieves. Lord Pearson urged that one must not take a defeatist attitude in this manner : additional precautions present the thieves with additional problems to be dealt with. The deterrent effect of additional precautions was not considered by the Defendant.

17. The other ground on which the Defendant's liability is established is based on the obiter dictum given by Lord Pearson and Sachs LJ in British Road Services Ltd., namely that the Defendant would be held liable for breach of its duty as a bailee by reason of the negligence or breach of contract on the part of the independent contractor, i.e. the Third Party engaged by it to perform of its duties. Lord Pearson at page 285 held that :

"In the end I find it unnecessary to decide whether, if the third parties were negligent in performing their contract with the defendants and thereby caused the loss of the goods, there would be a resulting liability of the defendants to the plaintiffs. But as the question was fully argued, I will express my concurrence with the decision of the learned Judge and his reasons. He cited from the judgment of Mr. Fenton Atkinson, QC, as Commissioner of Assize in Adams (Durham), Ltd, and Day v Trust Houses, Ltd, [1960] 1 Lloyd's Rep 380, the following passage at p.368 :

'It seemed to me that the duty to take reasonable care to keep that car safe rested on the defendants and they delegated that duty to Atkinson and they are responsible to the plaintiffs, not so much as being vicariously responsible for the torts of Atkinson driving about the streets, but on the basis that they had entrusted to him the fulfilment of their own contractual duty, and that duty was not performed, and for that breach of contract, apart from any special condition, in my view they are liable to the plaintiffs.'

I think that is right and applies in the case of an independent contractor, though in that particular case Atkinson was a servant of the defendants. Although there can be a bailment without a contract, there usually is and was in this case a contract, and the obligation of the bailee can be formulated as an implied term of the contract. This may help to bring out clearly the nature of the obligation. The bailor could not reasonably be expected to be content with a contractual promise of the bailee to take proper care of the goods or engage a competent contractor to do so. If that were the contractual promise, then in the event of default by a competent contract or duly selected by the bailee, the bailor would have no remedy against the bailee and would have to rely on the possibility of an action of tort against the contractor. To give business efficacy to the contract, the bailee's implied promise should be that he will himself or through his servants or agents take proper care of the goods."

Sachs LJ at page 289 held that,

"Turning now to the failure of Factory-Guards, Ltd, to keep a reasonable watch on the night in question, I am in full agreement with the view expressed by Lord Pearson and by the trial Judge, that the defendants must accept responsibility for the negligence of the third parties in the same way as if the patrolmen had been the defendants' own employees. The bailee is responsible for proper care being taken of the goods and to my mind he cannot escape from that liability merely by employing sub-contractors for that purpose, however reasonable may be his confidence in them. Any contrary decision would make a serious and unjustifiable inroad on the rights of bailors, and for this inroad there does not appear to me to be any authority."

Breach by the Third Party

18. Since I have held that the Defendant is also liable to the Plaintiff by reason of the negligence or breach of contract of the Third Party, I shall, at this stage, deal with this, although more would be said when I come to the case against the Third Party.

19. The Third Party was responsible for the management of the Building including the carpark. Much of what I have said regarding the additional precautions would also apply to the Third Party. Two car thefts had already occurred at the carpark prior to the theft of the BMW. These clearly showed that the security system at the carpark was inadequate.

20. As the company responsible for the management of the carpark, the Third Party must ensure that there would not be a repeat occurrence of theft. It is not an answer to say that additional security measures could not be carried out due to the absence of funds or that the management committee had not given its blessings to the implementation of these measures. How much was involved in carrying out these measures? What steps have been taken to obtain the funds? Were the management committee aware of how much was involved? There is an absence of evidence from the Third Party on these points.

21. What is more important is that by August 1993, there was already in place an in and out permit system whereby any one driving a car to the carpark had to obtain an in and out permit and when necessary, the caretakers may have the particulars of the driver's identity taken down. This is clearly shown in notice dated 11th June 1993 issued by the Third Party (page 196 of the bundle). This system was implemented after the theft of the Mercedes Benz in June 1993. To render this system effective, it must be observed by the caretakers who were standing guard at the entrance of the carpark. But Mr Cheung and his colleagues had ignored this system and allowed the car to be driven into the carpark. Further they should not have permitted entry without seeing a pass of the Defendant on the front panel of the car. Although Mr Cheung said that the staff of the Defendant would not usually display their pass when they entered the carpark, it must be borne in mind that the Defendant was required to display a pass on the cars that were being driven to the carpark and this requirement was made in 1992. Considering the time of the day, namely 9:12 p.m., when the two strangers entered the carpark, the caretakers should not have permitted entry upon their claim that they were the staff of the Defendant. The Defendant had closed its shop by then. They should have obtained proof of identity of the two strangers, such as their employee cards or their identity cards for registration.

22. It is clear from the evidence that the two persons in FJ9583 were the thieves who stole the BMW. The cause of the theft of the BMW was the entry by the two thieves whom the caretakers had not demanded any form of identification. Had the caretakers insisted on the production of their identity cards, I am satisfied that, in all probability, the two thieves would not have pursue with their scheme. The Third Party, through its employees was negligent or in breach of its duties. Relying on British Road Services Ltd., I am satisfied that the Defendant was liable for the acts of the Third Party.

23. Mr Tim Kwok, sought to distinguish British Road Services Ltd. by saying that the Defendant, unlike the warehouse in that case, did not engaged the Third Party to take up the security of the carpark. He argued that the Defendant, through its holding company, obtained a licence to the carparking space to store its customers' cars. Thus, the Defendant was a mere licensee or authorised user of the carparking spaces. It was argued that the contract between the Defendant as an owner of the Building, and the Third Party, was under the Deed of Mutual Covenant in which the Third Party agreed to manage the Building and to provide and maintain security to the Building. The Defendant had not delegated its duty as bailee to any independent contractor.

24. Although the Defendant did not, by a formal contract, separately engaged the Third Party to provide the security of the cars, it had certainly entrusted the security of the carpark to the Third Party. Apart from the security provided the Third Party, the Defendant had not provided any security of its own as a bailee of the cars of its customers. By depositing the cars under their bailment in the carpark, the Defendant must be responsible for their security as well. The Defendant was contended to leave the question of security to the Third Party. The emphasis of Lord Pearson and Sachs LJ was that to give efficacy to the contract between the bailor and bailee, the bailee must be responsible for the goods and it cannot escape liability by delegating that responsibility to someone else. I do not consider that Mr Tim Kwok's argument in this respect would assist the Defendant.

Other Breaches

25. Mr Yau, counsel for the Plaintiff, also relied on the breach of the Defendant in failing to notify the Plaintiff to collect the car as soon as practicable after the repair work was finished. He also argued that the Defendant did not have a system to monitor the caretakers' enforcement of the IN/OUT permit system. I would observe that the issue is one of causation and having found that the Defendant was negligent on the grounds I have indicated, it is not necessary to base my decision on the other grounds relied upon by Mr Yau.

Exclusion of Liability

26. The Defendant sought to rely on conditions set out in the Vehicle Repair Order ("VRO") and the invoice to exclude its liability towards the Plaintiff.

27. Clause 6 of the VRO read :

"The Company (i.e. the Defendant) shall not be responsible for any loss and/or damage to the Customer's vehicle or any articles attached to or left inside the vehicle whilst on the Company's premises or under the Company's control from whatsoever cause arising."

28. Similar provisions are contained in Clause 6 of the invoice issued by the Defendant.

29. Mr Ng Sai Shing, a former employee of the Defendant stated in his first witnesses statement of 10th May 1994 that it was the practice of the Defendant since January 1993 to issue to all customers with a VRO upon delivery of their vehicles to the Defendant for repair or service. He said that Mr and Mrs Choi of the Plaintiff were issued with VROs on 19th May 1993 and 10th August 1993 when they took the BMW to the Defendant for repair. In his second statement of 24th November 1994, Mr Ng, however, stated that the VRO system was implemented in September 1992 and prior to the theft of the BMW, the VROs were given to the Plaintiff on 28th November 1992 and 19th May 1993. He also corrected his earlier statement by saying that the VRO was given to Mr and Mrs Choi on 27th July 1993 and not 10th August 1993.

30. In respect of the two VROs allegedly given to Mr and Mrs Choi in November 1992 and May 1993, Mr Choi said that he had no impression that they were given to him. The Defendant could not produce copies of the two VROs allegedly given to Mr Choi on these two occasions. The burden of proof is on the Defendant to show that the VRO was given to the Plaintiff on these two earlier occasions. I am not satisfied that the Defendant has discharged the burden in this respect. There was no reason why the Defendant could not produce any copy of the VRO if the VRO had been issued to Mr and Mrs Choi since the VRO was in a set of duplicates. I am not satisfied that Mr Choi was given the VRO on the two earlier occasions.

31. In respect of the VRO allegedly issued to Mr Choi on 27th July 1993, quite apart from the fact that Mr Ng said that he had got the dates wrong, he said in his first statement that he handed over the completed VRO to Mr Choi. In his second statement, he said it was his colleague Mr Chu who handed the VRO to Mr Choi because he (i.e. Mr Ng) was asked to answer a telephone call at the cockloft office and he asked Mr Chu to handle the matter for him. In his oral evidence, Mr Ng said that while he was answering the phone at the cockloft he could see Mr Chu handing the VRO to Mr Choi. Although Mr Chu in his oral evidence referred to his handling of the VRO, he made no reference at all to this fact in his witness statement. In his evidence he said after Mr Choi completed his address, he (i.e. Mr Choi) removed the top page of the VRO and then left.

32. Mr Choi said that he was asked to write his address on the VRO on 27th July 1993 but he was not given the VRO on that occasion. The copy of the VRO produced by the Defendant did not have the signature of Mr Choi. I accept Mr Choi's evidence that he was not given the VRO on 27th July 1993. I do not accept that Mr Choi, as a customer, would on his own volition tear off one of the copies of the form himself as he might not know which one he should keep. I am not satisfied with the accuracy of the evidence of the Defendant's witnesses on matters relating to the VRO having taken into account the discrepancies and omissions in their witness statements and also their oral evidence.

33. The Defendant is therefore not entitled to rely on Clause 6 of the VRO in excluding liability.

Invoices

34. Regarding the invoices, there is no doubt that the Plaintiff had sent the BMW to the Defendant for repair on many occasions and invoices had been issued to Mr Choi when he collected the BMW. On some occasions Mr Choi also signed on the invoices. The Defendant argued that by signing the invoices, the Plaintiff was deemed to have or should have noticed of Clause 6 printed at the back of the invoice.

35. The law is clear. The conditions of the contract should be brought to the attention of the other party to be bound by such condition before or at the time when the contract is made (see Olley v. Marlborough Court Ltd. [1949]1 KB 532). Further Lord Devlin in McCutcheon v. David MacBrayne Ltd. [1964]1 WLR 125 at page 134 held that :

"This is a matter that is relevant to the way in which the respondents put their case. They say that the previous dealings between themselves and the appellant, being always on the terms of their 'risk note', as they call their written conditions, the contract between themselves and the appellant must be deemed to import the same conditions. In my opinion, the bare fact that there have been previous dealings between the parties does not assist the respondents at all. The fact that a man has made a contract in the same form 99 times (let alone three or four times which are here alleged) will not of itself affect the hundredth contract in which the form is not used. Previous dealings are relevant only if they prove knowledge of the terms, actual and not constructive, and assent to them. If a term is not expressed in a contract, there is only one other way in which it can come into it and that is by implication. No implication can be made against a party of a term which was unknown to him. If previous dealings show that a man knew of and agreed to a term on 99 occasions there is a basis for saying that it can be imported into the hundredth contract without an express statement. It may or may not be sufficient to justify the importation, - that depends on the circumstances; but at least by proving knowledge the essential beginning is made. Without knowledge there is nothing."

36. I accept Mr Choi's evidence that he was not aware of the existence of the exclusion clauses in the invoices. I accept his evidence that after he received the invoice he would pass it to the accounts office. He did not bother to read the invoice or the terms on the back because the repair was done and the charge was paid. The fact that he was also engaged in the fashion retail business does not mean he would necessarily know of the existence of or had read the printed clauses at the back of the invoices. He said in respect of his business, he did not have standard terms on the invoices. He said the term "No return of goods after goods left the shop" was printed on the front of the invoice and was of a sufficiently large size to be seen.

37. I rule that the Defendant is also not entitled to rely on Clause 6 of the invoice to exclude its liability.

Construction

38. Having ruled that the Defendant is not entitled to rely on Clause 6 of the VRO and the invoice, it is not necessary to come to a concluded view as to whether Clause 6 covered negligence as well. Mr Yau argued that Clause 6 is vague in that the absence of the proposition "of" after the word "loss" in Clause 6 leaves it ambiguous as to whether the loss refers to the loss of the vehicle or the contents inside the vehicle or loss of the contents attached to the vehicle. He argued that the rule of contra proferentum applies and the ambiguities should be resolved in favour of the one against whom the clause operates. He also argued that Clause 4 specifically referred to loss of car by theft and if Clause 6 is given the wide meaning to exclude liability for negligence, Clause 4 would be rendered otiose.

39. In my view, the absence of the proposition "of" in Clause 6, does not necessarily render it vague. Furthermore, Clause 4 would not necessarily render Clause 6 otiose since the former was dealing with the situation where the owner has not collected the car after being notified by the Defendant. What I find helpful is the case of Price & Co. v. Union Lighterage Company [1904]1 KB 412. In that case goods were loaded on a barge under a contract for carriage by which the barge owner was exempted from liability "for any loss or damage which can be covered by insurance". Lord Alverstone C.J. held that the clause does not exclude liability for negligence. He stated that :

"It is of course quite possible to construe the words 'any loss of or damage to goods which can be covered by insurance' as including everything, because practically everything can be so covered ... The question, however, is not whether these words could be made to cover such a loss, but whether in a contract for carriage they include, on a reasonable construction, an exemption from negligence on the part of the carrier ... the words of this contract can receive a contractual and businesslike construction and have effect without including in the exemption the consequence of negligence of the carrier. That being so, the principle that to exempt the carrier from liability for the consequence of his negligence, there must be words that make it clear that the parties intended that there should be such an exemption is applicable to the case ..."

40. The reasoning applies equally with force to this case. In a contract for bailment, Clause 6 can have a contractual and businesslike construction and have effect without including in the exemption the consequence of negligence of the bailee. A bailee must exercise reasonable care of the articles under its possession and custody. If it wishes to exclude liability for negligence, it should say so. In the absence of any express words, Clause 6 would not exempt the bailee from negligence.

Control of Exemption Clauses Ordinance (Cap.71)

41. Mr Yau also relied on s.8 of the Control of Exemption Clauses Ordinance ("the Ordinance") and argued that Clause 6 was unreasonable and the Plaintiff could not rely on it. There is no dispute that the Ordinance applies in this case.

42. Again, what I have to say in this regard is obiter in the light of my finding. As can be seen from s.3(6) of the Ordinance, it is for the Defendant to satisfy the reasonableness of Clause 6. The Court is to regard the circumstances which were, or ought reasonably to have been known to or in the contemplation of the parties when the contract was made (s.3(1)). The language in which the clause is used is another consideration (s.3(4)). Section 3(5) refers to the resources available to the Defendant to meet the liability and how far it was opened to the Defendant to cover itself by insurance.

43. Both the Plaintiff and the Defendant agreed that I should also consider the guidelines set out in Schedule 2 of the Ordinance although Schedule 2 does not apply to s.8. The guidelines make reference, inter alia, to the bargaining positions of the parties; whether the customer received any inducement to enter the contract, whether it had an opportunity of entering similar contracts with others but without having to accept a similar term and whether the customer knew or ought reasonably to have known of the existence of the term.

44. Mr Tim Kwok argued Clause 6 was reasonable. He submitted that there were many garages in Hong Kong which the Plaintiff could have used; the Plaintiff deliberately limited his choice between the repair service of the BMW company and the Defendant and eventually chose the Defendant and hence was apparently satisfied with its service; the Plaintiff had informed the Defendant of its lack of comprehensive insurance of the BMW which was another indication that the Defendant was a deliberate and confident choice; the Defendant did not make any representation that it would accept any form of liability of the BMW; the Defendant was only a temporary custodian of the BMW since the period of repair was short and the Defendant was entitled to exempt its liability; it was to the mutual benefit of both parties for the Defendant to provide a centralised service for repair and storage of the car; the car owners cannot be said to be forced to leave their cars in the garages; the Defendant did not make any representation in response to the indication that the BMW was not fully insured and the Plaintiff was not shut out from all remedies, it could sue the Third Parties for negligence.

45. I have taken into account the matters relied upon by Mr Tim Kwok but I am of the view that Clause 6 does not satisfy the reasonableness test. This is the case of a consumer entrusting its car to a car repairer for repair. The consumer has no control of the car during the time when it was in the possession of the repairer. How could it be reasonable if the repairer could disclaim liability if the car was lost during the time when it had possession of it and when the loss was due to negligence of the repairer? Why should the consumer seek further redress against another party if liability can be established against the repairer but for the exclusion clause? While there may be other garages in Hong Kong, a consumer must be able to decide for itself the type of garage it wish to entrust its car with. In the present case, Mr Choi had decided to use the Defendant, but it does not mean that the reasonableness of Clause 6 is something that he could not take issue with. Although Mr Choi received education up to the secondary school level, he did not need to write or speak English in his business. He could not fully understand the printed clauses. I accept his evidence in this regard. The Defendant is a member of the Guardforce Group, which is of very substantial scale. It is insured and it has superior bargaining power in the transaction with the Plaintiff. Lord Bridge in George Mitchell (Chesterhall) Ltd. v. Finney Lock Seeds Ltd. [1983]2 AC 803 observed that :

"... the Court must entertain a whole range of considerations, put them in the scales on one side or the other, and decide at the end of the day on which side the balance comes down."

46. Mr Yau referred to the speech of Lord Diplock in Instone v. A. Schroeder Music Publishing Co. Ltd. [1974]1 WLR 1308 at page 1316 :

"This [standard form of contract] is of comparatively modern origin. It is the result of the concentration of particular kinds of business in relatively few hands ... The terms ... have not been the subject of negotiation between the parties to it, or approved by any organisation representing the interests of the weaker party. They have been dictated by that party whose bargaining power, either exercised alone or in conjunction with others providing similar goods or services, enables him to say : 'If you want these goods or services at all, these are the only terms on which they are obtainable. Take it or leave it.' "

47. The issue in that case is not on the construction of the Ordinance but the observation of Lord Diplock is pertinent to the issue before us.

Conclusion

48. I find that the Plaintiff is entitled to recover the sum of $499,400 from the Defendant together with costs nisi of the action. There shall be interest on the sum at judgment rate from the date of service of the writ to payment.

Defendant's claim against the Third Party

49. The Defendant is seeking a contribution or indemnity from the Third Party of the Plaintiff's claim.

Bailment

50. The first cause of action by the Defendant against the Third Party is based on bailment. The Third Party entered into licence agreements with Guardforce, the holding company of the Defendant to enable the Defendant to use the carparking spaces at the basement. Mr Tim Kwok accepted that this arrangement was, prima facie, a relationship of licensor and licensee but argued that a bailment came into existence by the in and out permit system. He argued that the Third Party took possession or constructive possession of the BMW when operating the in and out system, it would not release the BMW without the surrender of the permit and hence it was a custodian of the BMW while it was in the carpark.

51. There is a distinction between bailment and licence. In Bailment (2nd Ed) by Palmer, at page 382, the learned author stated that :

"Most bailments are created or discharged upon premises occupied by the bailee and this fact, whilst not an essential feature of bailment, is clearly a strong pointer to a change in the bailor's possession. However, the mere leaving or depositing of chattels upon land occupied by another, even with his knowledge or at his invitation, does not necessary make the occupier a bailee. The law has repeatedly drawn a distinction between bailments and licences; the former requiring a transfer of possession and a voluntary acceptance of the common law duty of safekeeping, the latter amounting to no more than a grant of permission to the user of a chattel to leave it upon the licensor's land on the understanding that neither possession shall be transferred nor responsibility for guarding the chattel accepted."

52. Palmer further dealt with the indicators of a transfer of possession such as handing over of a key to the car to the bailor, (which is not relevant to the present case) and the procedures for recovery. At pages 392-3, he stated that :

" Thus, a defendant who imposes stringent security precaution to prevent the evasion of charges is more likely to find himself responsible for the vehicles on his premises than the operator who lacks such a system and works on a more haphazard basis. But it is not the effectiveness of the procedures that count so much as the intention behind them and if it can be shown that a defendant contemplated retaining exclusive control until any fees were discharged, the inference that he is a bailee should not readily be displaced simply by proving that his methods of enforcement were deficient.

Considerable emphasis is placed upon this element in recent decisions and there are several cases where the lack of such a procedure has been held to be fatal to the existence of a bailment. It is obviously a powerful factor and, in those cases in which it exists, will nearly always be decisive; ..."

53. In respect of payment of fees and charges, Palmer at Page 394 stated that :

" The greatest significance of this element lies not so much in its existence as in its timing, for all the cases of licences for good consideration have involved charges made at the time of depositing rather than that of withdrawal. If, as is most commonly the case nowadays, the charge is to be computed and paid at the end of the relationship, this will be strong evidence that the occupier intends to retain the chattel and owes the duties correlative to possession."

54. Palmer further dealt with space-renting agreements.

" Where an occupier grants the owner of a chattel the exclusive right to use a particular identified portion of this premises for storage or safekeeping, this agreement will frequently provide conclusive evidence against the creation of a bailment. The reason is that the exclusion of the occupier is inconsistent with the high degree of physical control necessary to constitute a delivery of possession ..." (Page 409)

" Even where the occupier has not specifically divested himself of the right to enter the area, but a specific part of his premises has been set aside for the plaintiff's personal use, there will generally be no bailment ... In Wilmers & Gladwin Pty Ltd. v. W.A.L. Building Supplies Pty Ltd. the defendants were sub-lessees of part of a large building, the floor space of which had been marked off into bays. They agreed to let two of the bays in their section of the building to the plaintiffs, the agreement being described in the invoices as 'Rental storage space'. They retained their key to the building and, when the plaintiffs wished to deposit goods, would send over an employee to open the door and assist in carrying them inside. It was held that they were not bailees of the goods thus deposited. They had not contracted for their custody and safekeeping but had merely made available to the plaintiff's company and given it the right to enter, use and occupy two bays on this open floor for the purpose of sheltering goods belong to the plaintiff and keeping the same there at the plaintiff's deposition and under its control." (Page 411)

" The continued or intermittent presence of the owner of goods will clearly militate strongly against any transfer of possession, at least where those goods are left on an area specifically assigned to his use." (Page 412)

55. Palmer at page 413 summarised the position as follows :

"What seems plain is that, in the ordinary run of events, the unattended hotel or restaurant car park will clearly not produce a bailment, while the modern multi-storey carpark, with its careful checks on incoming and outgoing cars and cumulative fee in return for parking space and tickets to be presented before allowing departure, will also invariably do so. Other cases will fall between the two."

56. At page 421, Palmer further referred to the implied term, requiring the occupier to exercise reasonable care and skill in the treatment of the goods even in cases where the licence is contractual. But he recognized that the existence of such an obligation will depend upon the precise ambit of the service which the occupier can be deemed to have contracted to supply.

57. Mr S.H. Kwok, counsel for the Third Party, submitted that the Defendant was the licensee of spaces at the carpark. It rented the spaces and had the exclusive rights to use and occupy the spaces. Having paid the rent there was no need for the Defendant to pay any parking charge when it parked its cars at the carpark. Its cars could come and go as they pleased subject to compliance of in/out procedures. These procedures were security measures to prevent car theft. They were not designed for collecting fees from the Defendant when it parked its cars there. Key of the cars were kept by staff of the Defendant. The Third Party had absolutely no control or possession over the cars whatsoever. Under these circumstances there could not be a bailment of the BMW.

58. He further argued that the relationship between the Defendant and the Third Party was purely contractual. The rights and obligations of the parties were spelt out in the terms contained in the "Licence for a Car Parking Space". There was no term under the Licence requiring the Third Party to take care of the Defendant's car. Furthermore, no such term could be implied into the contract as such term was not necessary to give business efficacy to the contract. The contract was merely for the purpose of granting permission for the licensee to occupy the space. To give effect to such a permission it was not necessary to imply to the licence a term that the licensor has to look after the licensee's cars.

59. In my view, although the initial arrangement between the Defendant and the Third Party was in the form of a licence arrangement in which no implied obligation could be read into it for the Third Party to be responsible for the safety of the cars of the Defendant, I am satisfied that by imposing the in and out permit system, the Third Party was assuming possession of the cars of the Defendant. This measure was no doubt implemented to prevent car theft but the effect was that no car would be allowed to leave the carpark without surrendering the permit to the caretakers of the Third Party stationed at the entrance of the carpark. No exception was made in respect of the Defendant's cars. This is the clearest indication that the Third Party was assuming possession of the cars of the Defendant. I am satisfied that bailment has been established in this case. The case is different from B.G. Transport Service Ltd. v. Marston Motor Company Ltd. [1970]1, Ll.L.R.371. The plaintiffs' lorry was parked at the defendants' carpark. The driver left the keys at a kiosk at the carpark, paid a fee and was given a ticket. The ticket contained provisions that the carpark was not responsible for loss of the car and the contents. A notice was also posted which excluded liability of the carpark. The loads inside the lorry was stolen. The court held that the plaintiffs used the carpark under a licence from the defendant. Bean J. held that the ticket played a small part in the running of the car park in the sense that it was not a prerequisite to the withdrawal of the vehicle that the ticket should be presented.

Deed of Mutual Covenant

60. The Defendant further framed its cause of action on the breach of duties of the Third Party under the terms of the Deed of Mutual Covenant ("DMC") of the Building.

61. The DMC was entered into on 31st January 1986 between the Third Party and the owners and developer of the Building. Under Section V, Part B, Clause 1, it is provided that the Third Party is to manage the Building in a proper manner. Clause 17 states that the Third Party is to provide a security force, watchmen, porters and caretakers and to provide and maintain burglar alarms and other security equipment and generally so far as may be possible to maintain security in the Building at all times.

62. Mr S.H. Kwok argued that the Defendant is not a party to the DMC, therefore it would not rely on it. He referred to Beswick v. Beswick [1968] AC 58 which stated that a person who is not a party to a contract cannot sue on it, even if it is purported to be made for its benefit. Furthermore, he argued that the Third Party has no proprietary interest in the Building and hence the Defendant could not enforce the terms of the DMC against the Third Party. He referred to Chapter IV of Hong Kong Conveyancing by Sihombing and Wilkinson which stated that :

"The DMC is a contract in the form of a deed containing, inter alia, a series of covenants for the management of the multi-storey building; some of these covenants are restrictive and others are positive. The parties to the DMC are the developer as vendor, the manager, and the first person to purchase a unit in the development. Between these parties there is privity of contract, making all the covenants in the DMC enforceable by and against the parties thereto. Under the principle of privity, these obligations and rights remain despite the fact that a party no longer owns any interest in the land for the benefit of which the covenant was made or to which the land was subject." [Para.108]

There are several possible ways for the covenants to pass with the land to whomsoever 'owns' the unit ... As will be seen below, the rules, developed over several centuries at common law and in equity for the passing of covenants, refer only to proprietary interests." [Para.110]

63. I am satisfied that the Defendant could rely on the terms of the DMC. The Defendant was the owner of the workshop Unit No.1 on the ground floor of the Building. Owners are defined in Clause 1 of the DMC as including the owners who entered into the DMC and their successors and assigns. The Defendant must come within the category of owners. As such the Defendant could enforce the terms of the DMC against the Third Party.

64. Further, s.39(1) of the Conveyancing and Property Ordinance provides that :

"A covenant relating to any land of the covenantee shall be deemed, unless the contrary intention is expressed, to be made with the covenantee and his successors in title and persons deriving title under or through him or them."

65. Section 39(1) is the equivalent of s.78(1) of the Law of Property Act 1925. Smith and Snipes Hall Farm Ltd. v. River Douglas Catchment Board [1949]2 KB 500 is an illustration of how the section works. The defendant who was the relevant drainage authority covenanted in an agreement under seal with the owners of certain land that it would replace a defective outfall with a new outfall and to maintain the work when it was completed. One of the owners transferred her interest to the plaintiff together with the benefit of the agreement. The plaintiff sued the defendant for damages when its land was flooded. The Court of Appeal affirmed the decision that the plaintiff was entitled to succeed in its claim. Tucker L.J. at page 507 referred to the case of The Prior and Spencer's case (1368)1 Sm L.C. 10th Ed, pp.56, 73 where the notes to Spencer's case stated that :

"Where such a covenant (namely, covenants running with the land made with the owner of the land to which they relate) is made it seems to be of no consequence whether the covenantor be the person who conveyed the land to the covenantee or be a mere stranger."

66. The covenants under the DMC relating to the management of and provisions of security to the Building run with the land. On the basis of s.39(1) of the Conveyancing and Property Ordinance, they are enforceable by the Defendant against the Third Party.

Breach of the DMC and negligence of the Third Party

67. I am satisfied that the Third Party was in breach of the DMC and also negligent in failing to provide security to the carpark. I have already set out my reasons earlier in my judgment.

68. Mr S.H. Kwok argued that the Third Party was not in breach. He relied on the case of Reebok Trading (Far East) Ltd. v. Pokfulam Property Management Ltd. (H.C.A. No.5263 of 1992). In that case a car was stolen from the carpark managed by the defendant at 1 o'clock in the morning. The caretaker who was on duty allowed the car to be driven out by the thief. Deputy Judge Wilson ruled that the defendant was not negligent. He found that it was not realistic for the defendant to have any perfect or real control, let alone vetting capacity, over all vehicles and their occupants. He said "At the end of the day it all boils down to the instinct and common sense of the gate caretaker". He further held that the caretaker's lapse in permitting the stolen car to leave without checking further had not shown to be the proximate cause of the loss of the car. The decision was reached on the particular facts of the case. There was a supermarket within the complex which was open to all the public to a late hour. I do not think that the case was of assistance to the Third Party. In this case, a system of In and Out Permit was implemented. Had the caretaker followed the procedure and insisted on the production of the identification by the driver, the thieves would on probability not persist with their scheme. The failure of the caretakers in observing the procedure was the proximate cause of the loss of the BMW.

Exemption Clauses

Clause 6 of the Licence

69. Clause 6 of the licence provided that :

"The Licensor shall not be liable for loss or damage to accessories of or articles left in or for damage to the vehicle or for the injury to persons while the licensee used the carpark pursuant to this licence."

70. The wording of Clause 6 simply does not cover the loss of the vehicle itself and as such Clause 6 is of no assistance to the Third Party.

Car Park Regulations

71. Clause 1 of the licence further provided that the licensee was to use the parking space subject to its acceptance of the terms and conditions set out in the licence.

72. Clause 21 provided that :

"The licensee shall observe and comply with such by-laws, Rules and Carpark Regulations as shall be made from time to time by the licensor in relation to car parking."

73. Regulation 11.0 of the Car Park Regulations displayed at the entrance of the carpark provided that :

"Please observe the 'Carpark Regulations' as laid down and displayed. The Management accepts no liability of theft, damage or injury suffered by any person or caused to any property inside the carpark."

74. Mr S.H. Kwok referred to Chitty on Contract (26th Ed.), Para.785 which stated that :

"Where printed notices are exhibited, it may be sufficient if the party to be bound has, before or at the time of making the contract, had his attention drawn to the notices, or received a printed document which refers him to the notices, in circumstances which make it clear to him that the contract is subject to the conditions contained in the notices. The reference may be circuitous provided it is clear."

75. He further argued that the Car Park Regulations were displayed prominently at the carpark since 1986. In the licence the Defendant's attention was drawn to the notice of the Regulations. The Defendant (through its holding company) signed the licence and was therefore bound by the Regulations.

Validity of the Exclusion Clause

76. The power to make the Regulations is part of the power to make house rules under Section V, Clause B2 of the DMC (page 19). It provided, inter alia, that the Third Party had power to make House Rules regulating the house operation and maintenance of the Building including the car parking spaces.

77. I agree with Mr Tim Kwok's submission that under Clause B2 there was no power to make provisions excluding the Third Party from liability for negligence. The fact that the exclusion clause was already in existence when the licence was entered does not meant that it is valid as against the Defendant who is entitled to rely on the DMC. On this basis, I would rule that this part of the Regulation is not effective against the Defendant.

Construction

78. If, however, the exclusion clause is valid, the next issue is whether the exclusion covers negligence on the part of the Third Party. I have earlier referred to Price & Co. and I would apply the reasoning of that case to the clause as well to hold that it does not include an exemption from negligence on the part of the Third Party. Mr S.H. Kwok referred to Ying Wei (Hop Yick) Cargo Service v. Nanyang Credit Card Co. Ltd. [1993]1 HKC 56 in which the Court of Appeal construed the clause which stated that "No damage claim to our company for this hoisting operation". It held that the clause excluded liability for negligence as well. It would appear that the court came to this view by reference to two other clauses in the agreement, namely, the contract price did not include insurance charges and that insurance against damage had to be provided by the plaintiff. The court stated that :

"There is authority that general words in an exemption clause do not ordinarily exempt the party seeking to rely upon the exception from liability for his own negligence or that of his servant (per Somervell L.J. in James Archdale & Co. Ltd. v. Comservices Ltd. [1954]1 WLR 459, 461). The relevant test, as formulated by Lord Morton in Canada Steamship Lines Ltd. v. R. [1952]1 Lloyd's Rep 1; [1952] AC 192 was quoted by Donaldson LJ in The Raphael [1982]2 Lloyd's Rep 42,44:

'Their Lordship think that the duty of a court in approaching the consideration of such clauses may be summarized as follows:

(1) If the clause contains language which expressly exempts the person in whose favour it is made (hereafter called 'the proferens') from the consequence of the negligence of his own servants, effect must be given to that provision. (Any doubts which existed whether this was the law in the province of Quebec were removed by the decision of the Supreme Court of Canada in The Glengoil Steamship Co. v. Pilkington).

(2) If there is no express reference to negligence, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence on the part of the servants of the proferens. If a doubt arises at this point, it must be resolved against the proferens (in accordance with art 1019 of the Civil Code of Lower Canada: 'In cases of doubt, the contract is interpreted against him who has stipulated and in favour of him who has contracted the obligation').

(3) If the words used are clear enough for the above purpose, the court must then consider whether 'the head of damage may be based on some ground other than that of negligence', to quote again Lord Greene in the Alderslade case. The 'other ground' must not be so fanciful or remote that the proferens cannot be supposed to have desired protection against it; but subject to this qualification, which is no doubt to be implied from Lord Greene's words, the existence of a possible head of damage other than that of negligence is fatal to the proferens even if the words used are prima facie wide enough to cover negligence on the part of this servants."

79. Applying Item 2 of the principles, there is no reference to negligence in the present exclusion clause. In my view, the clause does not cover negligence since it has expressly limited the areas in which liability may be excluded, namely, "no liability of theft, damage or injury suffered by any person or caused to any property inside the carpark." If the Third Party wished to exclude negligence as well it should say so.

80. In any event, there is, at least, a doubt as to whether the clause covers negligence, and applying the principles, the doubt should be resolved against the Third Party.

The Ordinance

81. Assuming that the exclusion included negligence as well, one still need to consider whether it satisfied the test of reasonableness. Again the parties agreed that I may take into account the factors in Schedule 2 of the Ordinance.

82. On the face of it, by reference to their corporate status, the bargaining power of the Defendant and the Third Party was more or less equal. While a standard form agreement was used, there was no evidence that the Defendant had objected to any terms in the agreement. However, the standard form agreement referred to the Carpark Regulations which were already in existence when the Defendant became an owner of a unit in the Building. The Regulations, if they were valid, were purportedly made pursuant to the terms of the DMC. In the circumstances how could the Defendant object to the Regulations referred to in the licence? To this extent, the bargaining power of the Defendant and the Third Party could not be said to be equal. While there was no question of inducement and the licence agreements were signed on previous occasions as well, I would nonetheless hold that the exclusion clause in the Regulations to be unreasonable.

Deed of Mutual Covenant

83. Clause B4 of Section V of the DMC (page 19) further provided that the Third Party was not liable for any acts done or omitted pursuant to the provisions of the DMC, not being an act or omission involving criminal liability or dishonesty or wilful negligence.

84. Mr S.H. Kwok argued that if the Defendant could rely on the DMC, then the Third Party would seek to exclude liability by that clause. The parties have not addressed me on the meaning of wilful negligence. In the context of a civil claim, would the word "wilful" add anything to negligence? It is for the Third Party to establish that the term "wilful negligence" is something different from negligence. In the absence of any submissions in this respect, I am not prepared to hold that this clause would exclude the liability of the Third Party for negligence. In any event, adopting my reasonings earlier, I would rule that this clause does not satisfy the requirement of reasonableness.

Contribution

85. Mr Tim Kwok relied on the Civil Liability (Contribution) Ordinance and sought contribution from the Third Party. He submitted that the Third Party must be fully responsible for the loss of the BMW or alternatively it must be responsible for a substantial portion of the liability.

86. Under s.4(1), the court may assess the contribution as may be just and equitable having regard to the extent of the responsibility for the damage in question. Sheen J. in "The Carnival" [1992]1 Ll.L.R.449, stated that in considering the extent of the responsibility for the damage, comparison can only justly be made by considering the two elements of blameworthiness and causative potency.

87. In my view both the Defendant and Third Party were responsible for the loss of the car. I have already set out the reasons why they were responsible. As to the portion of contribution, I find that the Third Party should be responsible for 2/3 of the damage suffered by the Plaintiff since the proximate cause of the theft was the non-observance by the caretakers of the In and Out Permit system. The Third Party was more blameworthy than the Defendant. Accordingly, there shall be judgment for the Defendant against the Third Party for 2/3 of the $499,400 and interest. The Defendant is also entitled to recover from the Third Party firstly, 2/3 of the costs that it is liable to the Plaintiff and secondly, the costs of the Third Party proceedings.

88. The order for costs in this action is made on a nisi basis and if the parties wish to address me further on the matter, they have the liberty to apply before me.

Representation:

Mr Albert Yau, inst'd by M/s C.K. Mok & Co., for Plaintiff

Mr Tim Kwok, inst'd by M/s Vivien Chan & Co., for Defendant

Mr S.H. Kwok, inst'd by M/s Hastings & Co., for Third Party