Orient Technologies Ltd v. A Plus Express (HK) Ltd

DCCJ006747/2003

DCCJ6747/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6747 OF 2003

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Coram: Her Honour District Judge Marlene Ng in Court

Dates of Hearing: 26 and 27 July 2004

Date of Handing Down Judgment: 10 August 2004

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J U D G M E N T

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Introduction

1.The Defendant ("D") was a carrier of goods for hire. The Plaintiff ("P") was the consignee of goods to be delivered by D. P claimed against D for loss/damages arising from the loss of goods whilst in the course of delivery by D to P.

2.Although the parties have in the pleadings accepted that P was/is a common carrier, both Mr Leung (counsel for P) and Ms Ng (counsel for D) agreed that P was/is in fact a private carrier.

3.A number of facts were agreed :

(a)	P issued a purchase order dated 20th September 2003 to P's Taiwanese supplier (ie Etoms Electronics Corporation ("Etoms")) for the purchase of 2,500 pieces of electronic components ("Goods").
(b)	On/about 2nd October 2003, by a delivery order (which Mr Leung and Ms Ng agreed was inappropriately referred to in the pleadings as an airway bill - "Order"), Etoms engaged Express Apex Limited ("EAL") of Taiwan to deliver Goods to P. The transport charges of HK$416.00 were payable by P.
(c)	Etoms filled out Order consisting of counterparts, some of which contained standard conditions of carriage ("Conditions") on the reverse page.
(d)	Etoms as agent for and on behalf of P entered into the contract of carriage in respect of Goods ("Contract") with EAL as carrier and D as sub-carrier. P was the consignee named in Order. There is dispute between the parties as to whether Conditions were incorporated in Contract.
(e)	EAL collected Goods from Etoms pursuant to Contract and arranged to deliver Goods by air to Hong Kong. P was therefore the bailor and EAL was the bailee of Goods under a contract of bailment (ie Contract).
(f)	D collected Goods in Hong Kong for delivery to P at its address at World Tech Centre in Kwun Tong ("P's Address") stated in Order. D was the sub-bailee under the contract of bailment.
(g)	On 6th October 2003, Goods were lost on the way of delivery to P.
(h)	The value of Goods was US$8.645 per piece of electronic component and the total value was US$21,612.50.

4.The circumstances of the loss of Goods as described by D's former staff, Lam Chiu Man ("Lam"), in his statement to the police on 6th October 2003 were not disputed and are summarised as follows :

(a)	On 6th October 2003, Lam, a delivery agent employed by D, collected goods and documents at D's company. He used a go-cart supplied by D to carry the goods/documents for delivery to various addresses stated in the delivery orders.
(b)	At about 10:30 am, Lam pushed the go-cart to Crystal Industrial Building in Kwun Tong ("Building") because he had goods for delivery to 6th Floor of Building ("Unit"). He left Goods on the go-cart outside Building against the wall unattended. Goods consisted of 2 boxes each measuring 1 foot by 1 foot and weighing 15 pounds.
(c)	Lam explained that since Building did not allow him to bring the go-cart and/or other goods for recipients in other buildings inside Building ("Restrictions") and he had to use his hands to carry the goods for delivery to Unit, he had to leave Goods and the go-cart outside Building. There was no one else to look after Goods when he went up to Unit to make delivery.
(d)	Lam returned to the go-cart in 10 minutes but Goods were gone. He searched for Goods in vain. There was no closed circuit television monitoring the place where Lam left the go-cart and the security guards of Building said they had not seen what happened.
(e)	Lam then reported to D by telephone and was instructed to report to the police, which he did. Lam suspected that Goods were stolen but had no suspect in mind.
(f)	Lam understood from P and D that neither purchased insurance for Goods.

5.Ms Ng accepted that but for Clauses 10 and 11 ("Clause 10" and "Clause 11") of Conditions (which were in the nature of exemption or limitation of liability clauses), D would be liable to P for the loss of Goods and for their value of US$21,612.50. Mr Leung also accepted that if D could successfully invoke Clauses 10 and 11, P's claim would be limited to US$100.00.

6.Clause 10 provides that :

"APEX is responsible for the comers documents or goods whilst they are within its custody or control and shall be liable subject to clause 2 hereof for loss sustained by the customer due to damage to or loss of the documents or good whilst in APEX's custody provided that such loss or damage was due to the negligence of APEX its servants or agents. Save as aforesaid APEX shall be under no liability in respect of the documents or goods carried by it and in particular shall be liable for the consequential loss however the same shall arise ......"

Both Mr Leung and Ms Ng agreed that Clause 2 as referred to in Clause 10 was not relevant here. Ms Ng also confirmed that due to the inherent ambiguity of the 2nd sentence of Clause 10, D would not be relying on such sentence.

7.Clause 11 provides that :

"The liability of APEX under these conditions shall be limited to the payment by APEX by way of damages of a sum not exceeding US$100.00 or its equivalent per consignment. For the purpose of establishing the amount of APEX's liability under this clause the value of a document shall be ascertained by reference to their replacement or reconstitution value at the time and place of shipment without reference to their commercial utility to the customer and other items of consequential loss."

Both counsel agreed that the 2nd sentence in this clause was irrelevant as this case did not involve any consequential loss.

8.Mr Leung and Ms Ng agreed that section 8 of the Control of Exemption Clauses Ordinance Cap.71 ("Ordinance") applied to Clauses 10 and 11 and that consideration should be given to the factors in Schedule 8 when considering the reasonableness of Clauses 10 and 11 (obiter view in Always Win v Autofit Ltd [1995] 2 HKC 48).

9.The issues relating to Clauses 10 and 11 are as follows :

Incorporation Issue

(a) whether P or its agent (Etoms) had reasonable notice of Conditions;

(b) whether Clauses 10 and 11 were incorporated into and form part of Contract;

Mr Leung accepted that since Etoms was P's agent in respect of Contract, it would be sufficient to establish that Etoms (and not necessarily P) had reasonable notice of Conditions.

Interpretation Issue

(c)	whether the loss of Goods was the result of (i) D's negligence (as contended by D) or (ii) D's recklessness or wilful neglect/default or wilful misconduct or gross negligence (as contended by P);

Subject to the Reasonableness Issue below, the parties agreed that Clauses 10 and 11 should have the following effect :

(i)	if documents/goods were damaged/lost whilst in the custody of A Plus Express Group ("Group") (including EAL and D) without fault, Group/D would be exempted from liability;
(ii)	if documents/goods were damaged/lost due to the negligence of Group/D their servants or agents, then Group/D's liability was limited to a sum not exceeding US$100.00 or its equivalent per consignment;
(iii)	if documents/goods were damaged/lost due to Group/D's fault other than negligence (such as due to D's recklessness or wilful neglect/default or wilful misconduct), then Group/D's liability fell outside Clauses 10 and 11 and should be dealt with under the law of contract.

There is a dispute between the parties as to whether an act of gross negligence fell within category (ii) or (iii) above.

Reasonableness Issue

(d) whether Clauses 10 and 11 were in breach of section 8 of Ordinance;

(e) whether Clauses 10 and 11 were reasonable and fair in the circumstances for D to rely on the same.

10.Mr Leung confirmed that P abandoned any reliance on P's averment in its Reply that D (being carrier of Goods) in leaving Goods on the pavement unattended had committed a fundamental breach of Contract which precluded D from limiting its liability under Clause 11.

11.The documents in Part C of the trial bundle are agreed as to admissibility and authenticity. Since the only contested issue related to Clauses 10 and 11 and Ms Ng accepted that burden was on D to establish the applicability of Clauses 10 and 11 to limit D's liability in the present case, D first opened its case pursuant to Order 35 rule 7(6) of the Rules of the District Court.

12.P called its director Sammy Lai ("Lai") and D called Fok Kam Hung ("Fok"), a supervisor of D's operation department, as witnesses. I granted leave for their witness statements to stand as their evidence in chief. Due to their different roles, the 2 witnesses dealt with different aspects of the subject transaction and background matters, so there is fairly little conflict in their evidence.

Fok's evidence

13.D has been carrying on business of courier of parcels in Hong Kong since 2000 and was associated with EAL under Group's network which carried on courier business under the service mark of A Plus Express ("APE"). Fok had worked for D as supervisor for 3 years. Prior to that, he also worked in the courier service industry. Fok's responsibilities within D were to collect orders from customers and arrange for parcels to be delivered to recipients as directed by customers or by a member company of Group.

14.Fok agreed (as stated in Group's service pledge) that D should give dedicated and good performance for all steps in the delivery of goods to customers. He accepted that customers relied on the courier company for the safe custody and proper delivery of their goods. Hence the courier company had a duty to take reasonable care of the goods to ensure safe delivery.

15.Fok explained that whenever a customer placed an order with D or a member of Group, eg EAL, for delivery of a parcel, a delivery order consisting of 7 counterparts would be used and he produced a sample (exhibit D1). All along D and EAL used the same format of delivery order (such as Order).

16.There were spaces on the delivery order to put the sender's details and a box for the sender's signature at the bottom left hand corner. The sender would usually fill in the delivery order (including the receiving company's details and the party to pay the transport charges) before or at the time when the goods together with the delivery order were handed over to the courier company, and the sender's representative would sign at the space provided. In the present case, it was marked on Order that the receiving company (ie P) would pay the transport charges. This was also reflected by the "COD payment on arrival of goods" stamp on Order in the box for remarks.

17.Fok said that in principle the sender should also fill in the box for "declared value for custom" by the time the goods were handed over to the courier company. However, if this box was left blank, the courier company would still handle the courier service.

18.Fok explained that after the sender filled in the delivery order, the sender would keep the sender's copy (as marked on the bottom left hand corner) for record. He pointed out the words "Non-negotiable airway bill subject to standard conditions of carriage shown on reverse side" ("Words") were printed at the bottom of the sender's copy of the delivery order and Conditions could be found on the reverse page. Fok said Words were required because the limitation of liability provisions and Conditions were not expressly stated on the front but on the reverse page. He disagreed with the suggestion that the typeface of Conditions was small and regular (not bold type) so that a reader would have difficulty in understanding. Fok said that in respect of the subject transaction, either Etoms would have already retained the sender's copy of Order after it was filled in or EAL's collection agent would have torn out that counterpart and given it to Etoms.

19.The courier company (EAL in this case) would mark the amount of transport charges on the delivery order and would retain the operations and billing counterparts of the delivery order. The remaining 4 counterparts (namely, 2 duplicate, 1 "POD" and 1 receiver's copies) would be sent together with the goods to the destination country by air.

20.When the goods arrived in Hong Kong, D would collect the goods from the air carrier's agent and Fok would arrange for a delivery agent to deliver goods to the receiving company's (P in the present case) address stated on the delivery order. The delivery agent would give the receiver's copy to the receiving company for record. Again, the receiver's copy had Words printed at the bottom of the front page and Conditions on the reverse page. At the same time, the delivery agent would require the receiving company's staff to sign on the "POD" copy to acknowledge safe receipt of the goods. D or other units handling intermediate delivery of goods would retain the duplicate counterparts. The duplicate and "POD" counterparts did not have Conditions printed on their reverse page.

21.Fok confirmed that the counterparts of Order for the subject transaction should have been handled in the aforesaid manner.

22.From April to October 2003 (ie before the subject transaction), there were 11 delivery orders from different senders through EAL instructing D to deliver parcels to P. For 3 of these 11 transactions, the sender was responsible for the transport charges. The receiving company paid the transport charges for the remaining transactions. Although Fok saw the delivery orders for these 11 transactions only after loss of Goods, he believed that the original delivery orders for these 11 transactions were also in sets of 7 counterparts. This meant that D would receive together with the goods 4 counterparts for each delivery order, namely, 2 duplicate, 1 receiver's and 1 "POD" copies. After each parcel was duly delivered by D to P, P's representative would be asked by D's delivery agent to sign the "POD" counterpart and D would give the receiver's copy with Conditions printed on the reverse page to P. Fok believed that by reason of the course of dealings between P and D, P should have knowledge of the contents of Clauses 10 and 11.

23.Fok had no idea of the value of Goods although Order did say Goods were electronic components from新竹area of Taiwan. He had no idea whether Goods were accompanied by a packing list, invoice and shipping notice but these documents were not essential for courier delivery. In his experience, he had heard of theft of goods by staff of courier company and he could not exclude the possibility of such theft.

24.After customs clearance, Goods were sent to D on 5th October 2003. In the morning of 6th October 2003, Fok instructed Lam, who served the Kwun Tong district, to deliver Goods to and collect transport charges from P. Fok accepted that he had no personal knowledge of the circumstances of the loss of Goods. However, he believed Lam's explanation as Lam had made an immediate report and gave a statement to the police.

25.Fok said that although there were no written guidelines given to D's delivery agents, they were given oral guidelines that if a delivery agent had to deliver goods to several recipients on one assignment, he should, when attending one recipient to deliver goods, bring the go-cart and goods for other recipients together with him. If he was not permitted to do so (eg where the building management imposed Restrictions), then the go-cart and other goods would be left outside the ground floor main entrance whilst he delivered goods to one recipient.

26.Fok said even though some building management imposed Restrictions, D's delivery agents would have goods for various recipients on the go-cart on any one journey in the interest of speedy delivery. Delivery would be delayed if a delivery agent carried goods for only one recipient on any one journey and had to return to D's office or the delivery van for collection of goods for the next recipient.

27.Fok disagreed that D sacrificed security for speed but he accepted there was a risk of theft if goods were left unattended on the pavement. D also had not explained to its customers that goods would be so left on the street. But Fok suggested that in his experience, customers would know that courier companies often left goods on the street.

28.Fok accepted there were alternative measures for handling the goods but they would affect the courier service. When asked under cross-examination whether D/delivery agent could contact P at the given telephone number to ask its staff to come down to collect Goods instead of leaving them on the street unattended, Fok said the delivery agent had many deliveries/recipients and not all recipients would be willing to do so.

29.Fok pointed out that a delivery agent would not know whether the building management of a building would impose Restrictions until the delivery agent arrived at the building and made enquiries. However, Fok himself knew that Building had such restrictions from what he had heard and from his past experience as a delivery agent himself.

30.Fok said he did not know whether World Tech Centre had Restrictions. When Fok was asked why Lam did not deliver Goods to P first (given Building imposed Restrictions and there was no evidence that there were other goods on the go cart), Fok said deliveries to multiple locations and the possibility of Restrictions often happened and delivery service could not be done if delivery to P first was insisted on. Anyway, Lam and the driver of the delivery van had to make deliveries of other goods still on the delivery van that morning.

31.After Goods were lost (ie on or about 10th October 2003), D made an offer to P for the sum of US$100.00 being agreed damages pursuant to Clause 11 but P rejected such offer.

32.Lam left D's employ about 2 months before the trial hearing.

Lai's evidence

33.P mainly traded in electronic goods, components and modules. Lai/P dealt with D about 10 times for carriage of goods from Taiwan to Hong Kong in P's history of 3-4 years. In fact D disclosed for these proceedings 11 previous delivery orders by EAL/D for delivery of goods from various senders to P. They represented almost all P's purchases of electronic components from Taiwan (mainly from 2-3 suppliers).

34.Lai dealt with a number of courier companies in the course of P's business when sourcing electronic components from South-east Asia and sending them to Mainland China for production. P would not request suppliers to use any particular courier company. On most occasions, they would select a courier service convenient for and familiar to them. The 11 transactions revealed that different Taiwanese suppliers all engaged EAL to courier goods to P in Hong Kong. But Lai could not anticipate whether Etoms would have chosen EAL or any other courier service.

35.The delivery orders for the 11 transactions showed that the name of P's staff (including Lai) was expressly written in the box titled "Recipient's Name". Lai explained that he was the contact person with the supplier for some transactions. Most delivery notes were signed by P's other staff with P's chop affixed thereto. P had safe receipt of the goods delivered under these 11 transactions.

36.Lai agreed that for the 11 transactions, P should have been given the receiver's copy of each delivery order at the time when the goods were delivered to P, but he never saw such receiver's copy and was not aware/had not heard of Conditions on the reverse page. Had he been aware of Words at the bottom on the front page of the receiver's copy and of the printed terms on the reverse page, Lai would have made enquiries as to when the exemption or limitation of liability applied and would have requested an explanation of D's workflow. Lai accepted that his colleagues who received the receiver's copy might have been aware of Conditions.

37.P had a standing account with D for monthly billing of D's courier services. After P and D had dealings for some time, D granted P a credit term for settlement of the transport charges for P to arrange payment by cheque instead of paying cash on delivery.

38.In the present case, P sourced electronic goods from Taiwan. Generally the Taiwanese supplier would fill in the delivery order. There was no declaration of value of Goods at the face of Order but P could not have anticipated such omission by Etoms. Lai was not personally aware of the terms of carriage as this was done informally and mainly by telephone. He was responsible for sales matters (so he was often not in Hong Kong) and was generally not involved in ordinary carriage of goods.

39.Lai took exception to D leaving Goods on the pavement unattended. If D wished to exempt or limit liability, Lai expected D to explain clearly the circumstances and conduct when such exemption or limitation applied. Had he known, Lai would definitely have looked into the matter as P/Lai considered the safety/security of their goods as important. If D would exempt or limit liability for leaving customer's goods on the pavement unattended, Lai would not continue to retain D's courier services and would instruct its suppliers to desist from using D.

40.Further, had Lai been aware that Goods were left on the pavement unattended, he would have arranged for P's staff to collect Goods from the payment. In fact, P wanted Goods as soon as possible and had chased D several times for them. As D understood, the time required for carriage of goods from Taiwan to Hong Kong was 1 day, and this was the timeframe P expected of a courier company.

41.P did not carry insurance on Goods in transit. Lai had no idea whether D as carrier had taken out any insurance. Lai explained that sometimes P would purchase insurance for goods to be couriered from the supplier to P. However, as P pressed Etoms for urgent delivery of Goods and the delivery date, which depended on when Goods were produced, was uncertain, D would have been unable to purchase insurance coverage. Further, the small quantity of Goods meant the value involved would not be substantial. Whilst transport charges for Goods were HK$416.00, the estimated insurance premium would be several hundred dollars to HK$1,000.00. Lai accepted that one could instruct a courier company to purchase insurance cover but no such request was made for the subject transaction.

42.P's registered office/place of business was at P's Address, which was also the registered office/business address of Grand Empire Technology Ltd ("GETL"). GETL was/is P's related company sharing common directors, shareholders and staff. It carried on the business of sourcing goods from Hong Kong and overseas, and on-selling them in Hong Kong and Mainland China. Lai said it would not be surprising that GETL also retained D to courier goods on its behalf. He agreed that D would let GETL have blank delivery orders for GETL to fill in when they had goods requiring D's courier service. On the sample GETL delivery order produced, it could be seen that GETL's sender account number was HKG01803 which Lai said was a billing/payment account reference. However, Lai also pointed out some delivery orders for the aforesaid 11 transactions also had the same sender account reference, so these transactions could be referable to GETL's orders.

Incorporation Issue

43.There is no dispute between the parties on the law on this issue, including the legal principles referred to by Ms Ng in Thompson v London, Midland and Scottish Railway Company [1930] 1 KB 41, Olley v Marlborough Court Limited [1949] 1 KB 532 and Cockerton v Naviera Aznar, SA [1960] 2 Lloyd's Rep 450.

44.On the question as to whether EAL/D had given reasonable notice to P/agent, Mr Leung accepted that it is unnecessary that P/agent must have read Conditions or that they should be subjectively aware of their import or effect. He further accepted that if P/agent knew that there was writing or printing on Order, even though they did not know it contained Conditions or Clauses 10 and 11, then Conditions and Clauses 10 and 11 would become terms of Contract.

45.In my view, considering the largely undisputed factual circumstances of this case, I find that EAL/D had given reasonable notice of Conditions and/or Clauses 10 and 11 to P :

(a)	I find on balance that Etoms filled in Order in a set of 7 counterparts as in exhibit D1, and retained the sender's copy with Words at the bottom on the front page and Conditions printed on the reverse page. Fok gave evidence to the effect that both D and EAL used the same format of delivery order all along and there is no reason to believe that Order was in any way different. Indeed, the available duplicate copy of Order suggests that the same format was used.
(b)	Etoms' staff filled in and signed Order. The signature of Etoms' staff appeared close to Words. Words appear plain and legible and cannot be regarded as small or inconspicuous. In my view, Words would have been reasonably noticeable by any reader of the sender's copy and hence Etoms as P's agent would have had reasonable notice of Words before or at the time of entering into Contract. Mr Leung in his final submissions disclaimed any complaint that Words were in the English language or any reliance on section 3(4) of Ordinance.
(c)	In my view, Words would be sufficient to bring reasonable notice of Conditions on reverse page of the sender's copy to Etoms as P's agent. There is particular reference in Words to "standard conditions of carriage" and "reverse side". Further, Conditions are on the reverse page and a reader/ customer does not have to cross-reference to another document.
(d)	On the reverse page, the words "standard conditions of carriage" are printed in large capital typeface and Conditions started off with the phrase "important advice to customers" in capital letters. The preamble alerts any reader/ customer to limitations of liability in Conditions and urges him to take appropriate steps :

"By the Conditions set out below APEX and its servants and agents are not liable at all for certain losses and damage and if they are to be liable the amount of liability is in all circumstances limited to the amount stated. Customers are therefore advised to seek their own insurance cover in any areas in which liability and fault are not clearly accepted by APEX."

	I consider the above as clear and cogent warning and I do not consider the typeface unreasonably small or illegible.
(e)	Both Lai and Fok accepted that in the 11 previous delivery orders handled by D for P, P received the receiver's copy with Words printed on the front page and Conditions on the reverse page. By such past course of dealings between the parties and Lai's acceptance that P's staff could have had notice of Conditions from the receiver's copy received from D, in my view, even P had reasonable notice of Conditions. The fact that Lai personally had not seen the receiver's copy of these 11 transactions or that he was personally unaware of Conditions do not necessarily suggest lack of reasonable notice to P.
(f)	Lai accepted that GETL and P shared common directors, shareholders, staff and place of business. D had provided to GETL blank delivery orders containing Words and Conditions for use by P/GETL's common staff at P's Address when D's courier service was required for delivery of goods/ documents. Therefore, P and GETL's common staff would have reasonable notice of Conditions on the reverse page of the receiver's copy received from D.

46.Mr Leung contended that since Clauses 10 and 11 were so onerous, they should have been brought specifically to P's or Etoms' attention, and yet they were submerged in the fine print of Conditions. In this respect, Mr Leung relied on para.12-015 at pp.714-715 of Chitty on Contracts 29th ed. (2004) Vol.1 which said that where the condition relied on is one which is particularly onerous or unusual, the party tendering the document must (although the party receiving the document knows it contains conditions) show that it has been brought fairly and reasonably to the other's attention. Mr Leung cited Denning LJ's comment in J Spurling Ltd v Bradshaw [1956] 1 WLR 461, 466 which suggested that some of such clauses that the learned judge had seen would need to be printed in red ink with a red hand pointing to it before the notice could be held to be sufficient.

47.However, each case must turn on its own facts. The first question is whether Clauses 10 and 11 are so exceptionally onerous and unusual as to demand the special treatment suggested. Ms Ng referred to Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd, Rennie Hogg Ltd (third party) [1973] 1 QB 400 where the relevant limitation of liability clause provides for limitation of the carrier's liability however sustained to certain maximum and minimum sums. Lord Denning MR at p.412 suggested that it was the common practice of carriers to make conditions limiting their liability to specific sums and to leave the goods owner to insure if he wanted greater cover. Further, Halsbury's Laws of England 4th ed (2004 reissue) Vol.5(1) para.624 at p.529 also states as follows :

"Carriers of goods usually undertake to carry on terms contained in standard conditions of carriage ...... Standard conditions invariably contain provisions limiting or excluding liability for loss of or damage to goods; and, in so far as they seek to exclude or restrict iability for breach of any contractual or common law duty to take reasonably care or exercise reasonable skill, they are subject to a test of reasonableness." (my emphasis)

Given the prevalent practice of carriers to limit liability in a manner similar to Clause 11, it is doubtful and I do not accept that Clauses 10 and 11 are exceptionally onerous and unusual.

48.In any event, even if Clauses 10 and 11 are onerous and unusual (which I do not agree), I am satisfied on my analysis and findings above that in all the circumstances they have been reasonably and sufficiently brought to the notice of P or its agent and that such Conditions and clauses form part of Contract.

Interpretation Issue

49.D only conceded liability for loss of Goods (subject to Clauses 10 and 11) on the basis that D, its servants or agents had been negligent. P on the other hand suggested that D's conduct in handling Goods amounts to recklessness, wilful neglect/default, wilful misconduct or gross negligence.

50.I will first deal with the short matter of gross negligence. Given that Clauses 10 and 11 limit liability for D's negligence to a maximum sum per consignment, gross negligence clearly falls within the scope of Clauses 10 and 11. Ms Ng referred me to the Court of Appeal case of Ying Wei (Hop Yick) Cargo Service v Nanyang Credit Card Co Ltd [1993] 1 HKC 56 which held that if the exemption clause effectively gave rise to an exclusion for negligence, it mattered not whether it was gross negligence or minor acts of inadvertence.

51.In the circumstances, it is incumbent on P to establish on the balance of probabilities that D's culpability amounted to recklessness or wilful neglect/default or wilful misconduct in order to bring it outside Clauses 10 and 11. Ms Ng's diligent research has brought forth the useful case of The Thomas Cook Group Ltd & ors v Air Malta Co Ltd (trading as Air Malta) [1997] 2 Lloyd's Rep 399 where Cresswell J reviewed the relevant authorities on the meaning of wilful misconduct and stated as follows at p.13 of the Lexis-Nexis transcript :

"From the above authorities and in particular Laceys Footwear sup. I derive the following steps/propositions:

1. The starting point when considering whether in any given circumstances the acts or omissions of a person entrusted with goods of another amounted to wilful misconduct is an enquiry about the conduct ordinarily to be expected in the particular circumstances.

2. The next step is to ask whether the acts or omissions of the defendant were so far outside the range of such conduct as to be properly regarded as "misconduct". (An important circumstance would be a deliberate disregard of express instructions clearly given and understood.)

3. It is next necessary to consider whether the misconduct was wilful.

4. What does not amount to wilful misconduct? Wilful misconduct is far beyond negligence, even gross or culpable negligence.

5. What does amount to wilful misconduct? A person wilfully misconducts himself if he knows and appreciates that it is misconduct on his part in the circumstances to do or to fail or omit to do something and yet (a) intentionally does or fails or omits to do it or (b) persists in the act, failure or omission regardless of the consequences or (c) acts with reckless carelessness, not caring what the results of his carelessness may be. (A person acts with reckless carelessness if, aware of a risk that goods in his care may be lost or damaged, he deliberately goes ahead and takes the risk, when it is unreasonable in all the circumstances for him to do so.)

6. The final step is to consider whether the wilful misconduct (if established) caused the loss of or damage to the goods."

52.Ms Ng referred also to the case of National Semiconductors (UK) Ltd v UPS Ltd and Inter City Trucks Ltd [1996] 2 Lloyd's rep 212 (Lexis-Nexis transcript). In that case, a driver parked his lorry with a valuable load of goods and went to have a meal with a fellow driver travelling in convoy with him. The lorry was left in a street with adequate lighting and plenty of room in the parking area but it was not visible from the restaurant. There was also an automatic steering immobilizer. When the driver returned about an hour later, both the lorry and the trailer had vanished. The plaintiff claimed for the value of the lost goods. The driver's employer did instruct him not to park his lorry in remote areas, to use well-lit populated parks on streets particularly in city centres and always in Italy never to leave his lorry unattended except in an approved parking area. But the court was convinced that the driver did not have his employer's instructions in mind when he left the vehicle and he did not consciously take a risk that he knew he ought not to take. There was therefore no wilful misconduct.

53.National Semiconductors (UK) Ltd's case (supra) referred to Circle Freight International Ltd (t/a Mogul Air) v Medeast Gulf Exports Ltd (t/a Gulf Export) [1988] 2 Lloyd's Rep 427, a case cited by Mr Leung in respect of the interpretation of "wilful neglect". In that case, goods were stolen from the freight forwarders' van which was left unattended on the street by their driver. The driver collected 3 consignments and before making a further collection decided to make a delivery. He parked at double yellow lines, got out of the van and left the key in the ignition but did not lock the van. He had in the back of his mind that he would make a quick getaway in case he was in trouble with the police. The Court of Appeal upheld the judge's findings that (a) the driver must have had in mind the risk of theft, (b) he took a deliberate choice to leave the van unattended, and (c) in so doing he knew he was disobeying instructions from his employer. The Court of Appeal said there was ample justification for the judge to conclude that the freight forwarders were guilty of wilful neglect.

54.The starting point is that D should take reasonable care of Goods and to have a system in place to ensure safe and timely delivery to P. The system or measures would have to be appropriate to and compatible with the relevant situation without the benefit of hindsight and the measures employed must be looked at in the round. This is conduct ordinarily expected of a courier company.

55.In my view, Lam (as D's servant/agent) in leaving Goods on the go-cart on a pavement unattended with an obvious risk of loss is conduct going outside the range of proper conduct of a courier service and is clearly an act of wilful neglect or misconduct. D's conduct, whether by itself, its servants or agents, is plainly more culpable than negligence or even gross negligence :

(a)	Ms Ng argued there was no evidence of a deliberate disregard of any express instructions clearly given to and understood by Lam and D's only failure was to maintain a good system of work, which was not wilful misconduct or neglect.
	Fok, as a supervisor who assigned work to delivery agents, knew of the importance of proper delivery of parcels and of the customers' reliance on D for safe custody of goods. He also knew that D had to take reasonable care of the goods entrusted to its custody. D's system of work and instructions to employees must be viewed against these known objectives and customers' expectations.
	According to Fok, the following oral guidelines were given to D's delivery agents :
	(i)	The delivery agent should bring the go-cart and goods for other recipients together with him when he delivered goods for any one recipient.
	(ii)	If he was not allowed to do so (eg where the building management imposed Restrictions), then the go-cart should be left outside the ground floor main entrance whilst he delivered the goods to the relevant recipient within the building.
	This meant that D contemplated and expected its delivery agents to leave the go-cart with customers' goods outside the building unattended under certain circumstances. This was so despite (1) D/Fok knew Restrictions did occur in certain buildings, (2) Fok accepted that goods so left unattended faced a risk of theft, (3) D had not explained to customers that goods would be so left unattended, (4) D/Fok knew that there was only one delivery agent per delivery trip by go-cart (as in the case of Lam for the subject delivery) and (5) D must have known (given his role as supervisor who assigned work to delivery agents) a delivery agent would have goods for various recipients on any one trip by go-cart.
	In this case, Fok as D's supervisor who assigned work to Lam actually knew Building imposed Restrictions. The risk of loss/theft of Goods was therefore obvious and real and yet there was no suggestion at all that he took any measures to warn Lam of such risk given the usual delivery practice as outlined above.
	Fok's bare assertion of his experience and belief that customers knew courier companies would leave goods on the street is inconsistent with his own evidence that D never told customers of this matter and Lai's evidence that P did not have such knowledge. I reject Fok's bare assertion.
	In my view, whilst I quite agree that Lam did not breach D's instructions as outlined above, D's instructions and system were seriously and fundamentally flawed. According to Fok's evidence, D admittedly had in mind the risk of the theft. It was a deliberate choice to leave the go-cart and customers' goods unattended on the pavement where all and sundry, including thieves, would have easy access.
	There is an absence of consideration given to alternative measures to seek a balance of the twin objectives of security and speed, both objectives being as a matter of common sense necessarily important to customers. Fok himself admitted that alternative measures existed. Ms Ng in her final submissions suggested some useful measures, including sending another staff member to accompany the delivery agent to make the delivery round or to keep goods for other customers in the delivery van pending delivery, but there is no evidence that these alternative means had been explored or considered.
	Although it was also suggested to Fok in cross-examination that deliveries should be staggered to avoid delivery first to buildings known to impose Restrictions (such as Building) or that the relevant customer could be asked to collect goods if the difficulty of Restrictions occurred, Fok appeared unreceptive to these suggestions, saying that the delivery agent/driver had other deliveries to do. Fok did not impress me as having given due, proper and balanced consideration to the twin objectives of speed and security. I find D's oral guidelines to its delivery agents and approach unreasonable in all the circumstances.
	Looking at the matter in the round, D/Fok's arrangements sacrificed the security of customers' goods for speed in effecting delivery. The absence of consideration for security protection in favour of speed clearly showed that D's conscious choice of leaving Goods unattended was unreasonable as amounting to wilful neglect and, at the very least, reckless carelessness.
(b)	Ms Ng submitted that it could be inferred that Lam's conduct was a momentary decision on his part. I find that there is insufficient evidence to enable me to draw such an inference. Rather, given the consistency between D's oral guidelines and Lam's conduct, on balance it is more probable or likely that Lam was following D's oral guidelines.
	Even so, I find that the decision by Lam, as D's delivery agent who (as common sense suggests) must have known that his duty was to safely deliver goods to recipients, to leave Goods unattended on the pavement outside Building where :
	(i)	he knew that there was no closed circuit television monitoring at the place where he left the go-cart and Goods;
	(ii)	there is no evidence that Lam asked the security guards of Building to keep an eye on the go-cart and Goods;
	(iii)	where the pavement was accessible by all including thieves; and
	(iv)	Goods were portable and could be easily spirited away (see below),
	give ground to conclude he was guilty of recklessness vis-à-vis customers/ recipients despite D's oral guidance.
	Ms Ng drew a comparison with the case of National Semiconductors (UK) Ltd's case (supra) but I do not find the analogy useful. Each case must be decided on its own facts. Although the court held in that case that the driver did not take a conscious risk, the court there had the benefit of hearing evidence of the driver and was in a better position to assess his mind on the incident. Here, although Lam was in D's employ until just 2 months before the trial, D chose not to call or subpoena him as a witness.
	In any event, the driver in the National Semiconductors (UK) Ltd's case (supra) parked and presumably locked the lorry which had automatic steering immobilizer. In the present case, D/Lam knew that Goods were easily portable and there is no evidence to suggest that Goods were not left loose on the go-cart.
(c)	Ms Ng noted that Lam only left Goods unattended for 10 minutes. However, the brevity of time does not detract from the fundamental and serious flaw to the whole delivery arrangement given the known risks of exposure to theft or loss. Indeed, in Circle Freight International Ltd's case (supra), the driver left the van unlocked to make a quick delivery down the street and then come back for a quick getaway. But the court considered that he must have had in mind the risk of theft and made a deliberate choice to leave the van unattended. In that case, the driver breached the employer's instructions by so doing but a proper system was in place. Worse still in the present case, the system itself was seriously flawed.
(d)	Ms Ng submitted that there is no evidence that Lam stole Goods. I agree, but this again does not detract from the aforesaid analysis.

56.In the circumstances I find D's conduct (by itself or its servant/agent) amounts to wilful misconduct/neglect or reckless carelessness and thus falling outside the scope of Clauses 10 and 11. Therefore, D is unable to invoke Clauses 10 and 11 in answer to P's claim.

57.This is sufficient to deal with D's defence. However, for completeness, I will deal with the Reasonableness Issue briefly on the assumption that D's culpability only amounted to negligence.

Reasonableness Issue

58.Mr Leung submitted that Clauses 10 and 11 operated against D's pledge that D and its staff would ensure that all steps in the delivery process should be performed diligently and well. D was the main courier service provider to P in relation to the delivery of goods from Taiwanese suppliers to P. Further, Goods were required urgently and it was impossible for P to arrange insurance coverage in light of the uncertain delivery date. Mr Leung also relied on Lai's evidence that had he known of such clauses, he would have ascertained with D the operation workflow and the circumstances for the application of these clauses. Lai might even decide not to retain D's services or he would instruct its suppliers not to instruct Group. Mr Leung asked me to bear in mind that Conditions are in printed form and are unlikely to be negotiable. In all, Mr Leung submitted that Clauses 10 and 11 are unreasonable and D could not rely on the same. Furthermore, the court should not rewrite the terms of such clauses for D.

59.Ms Ng submitted that Clauses 10 and 11 made clear reference to the exclusion of all of D's liability except for negligence and D's liability for negligence was limited to US$100.00 per consignment. Ms Ng argued that the authorities clearly show that where a clause contains an express exemption from the consequence of negligence, effect must be given to that provision (see Gillespie Brothers &Co Ltd's case (supra) at p.419, Spriggs v Sotheby Parke Bernet &Co [1986] 1 Lloyd's Rep 487 and Ying Wei (Hop Yick) Cargo Service's case (supra) at pp.60-61). Mr Leung did not challenge the principles in these cases.

60.I agree with Ms Ng that Clauses 10 and 11 contain clear, specific and unambiguous limitation of D's liability from the consequence of negligence of its own servants. In my view, these clauses are fair and reasonable having regard to the circumstances known/contemplated or ought to have been known/contemplated by the parties when Contract was made.

61.Section 3(5) of Ordinance provides that where a contract term seeks to restrict liability to a specified sum of money, the court in considering its reasonableness shall have regard to (i) the resources available to him to meet the liability should it arise and (ii) how far it is open to him to cover himself by insurance. Schedule 2 of Ordinance suggests that in the applying the reasonableness test, the court can consider the strength of the bargaining positions of the parties, whether an inducement has been given for the customer to agree to the term, whether the customer knew or ought to known the existence/contents of the term, etc. The following matters are relevant in the present case :

(a)	On the matter of insurance, EAL/D were not the owners of Goods and had no idea what Goods were except for the description "IC 2500 pcs" on the face of Order. The value of Goods was not declared and it would have hampered D in effecting insurance cover for Goods. Furthermore, Conditions specifically advised customers to seek their own insurance cover in areas on which liability/fault were not clearly accepted by D.
(b)	I also accept that both sides had equal bargaining power in that P or its agent could at the time of Contract choose to retain the services of another courier service company. Had P/Etoms been unhappy with Clauses 10 and 11, P/Etoms could easily have retained the service of another courier company. Lai said in his experience there were other courier companies available but he left the choice to his suppliers.
(c)	There is no evidence of any inducement to P/its agent to agree to Contract and/or Clauses 10 and 11.

62.I therefore find that Clauses 10 and 11 satisfy the requirement of reasonableness in Ordinance and D is entitled to rely on the same insofar if its liability arises from negligence.

Conclusion

63.I therefore grant judgment to P against D for the sum of US$21,612.50 with interest thereon at the rate of 8% pa from the date of the writ of summons to the date of judgment and thereafter at judgment rate until full payment.

64.There is no reason why costs should not follow event. I therefore grant a costs order nisi that D do pay P's costs of the action (including any costs reserved) to be taxed if not agreed with certificate for counsel.

Representation:

Mr Richard Leung instructed by Messrs Hon & Co for the Plaintiff.

Ms Queeny Ng instructed by Messrs Raymond Chan, Kenneth Yuen &Co for the Defendant.