Tai Wall (China-h.K.) Container Services Co Ltd v. Fan Chi Hoi
Read the full judgment text of DCCJ 5126/2003 on BabelCite. This District Court judgment.
1. Tai Wall (China-H.K.) Container Services Company Limited (“ Plaintiff ”) carried on local and China-Hong Kong cross-border container transport business. It was the registered owner of a container tractor registration no.FZ6276 (“ Tractor ”). Between September 1998 and February 2002, Fan Chi Hoi (“ Defendant ”) was a China-Hong Kong cross-border container tractor driver (“ CB Driver ”) assigned to drive the Tractor. At the time of the trial, the Defendant was a local container tractor driver (
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DCCJ5126/2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 5126 OF 2003 ------------------------ BETWEEN
------------------------ DCCJ5370/2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 5370 OF 2003 ------------------------ BETWEEN
------------------------ [Consolidated pursuant to the Order of Master L C Tam in Chambers Coram: H H Judge Marlene Ng in Court Dates of Hearing: 24th, 25th and 26th April and 23rd May 2006 Date of Judgment: 12th September 2006 ------------------------ J U D G M E N T ------------------------ I. Introduction 1.Tai Wall (China-H.K.) Container Services Company Limited (“Plaintiff”) carried on local and China-Hong Kong cross-border container transport business. It was the registered owner of a container tractor registration no.FZ6276 (“Tractor”). Between September 1998 and February 2002, Fan Chi Hoi (“Defendant”) was a China-Hong Kong cross-border container tractor driver (“CB Driver”) assigned to drive the Tractor. At the time of the trial, the Defendant was a local container tractor driver (“HK Driver”). 2.On 23rd February 2002, the Defendant drove the Tractor to deliver a 20 feet trailer (“Trailer”) to 葵聯車行 (“Kwai Luen”), a car repair business owned or ran by Ching Kwong Ming (also nicknamed 四眼光, “Ching”), at 廣琛停車場 (“PRC Carpark”) in Shenzhen, Mainland China for repairs. The Defendant parked the Tractor at the PRC Carpark, but when he returned on 25th February 2002 it had disappeared. 3.In/about June 2002, the Defendant commenced a claim (LBTC5051/2002, “LT Case”) against the Plaintiff at the Labour Tribunal (“Tribunal”) for employment-related relief. The LT Case was settled (“LT Settlement”) at the hearing on 2nd July 2002 (“LT Hearing”). The LT Settlement was made subject of an Award/Order inter alia that the Plaintiff was to pay the Defendant the sum of HK$26,000.00 (“LT Order”). At the LT Hearing, the Plaintiff’s Mr Siu King Yin (the Plaintiff’s director/secretary, “Siu Jr”) wrote/signed a written confirmation that “本人[Siu Jr]榷認儘快會做脫證之手續，以便[the Defendant]可以重新找工作，儘量在二個月內，即9月2日之前 [Siu Jr’s signature]” (“Confirmation”). II. Plaintiff’s claim 4.The Plaintiff claimed the Defendant was a self-employed independent contractor (街車) who signed a Chinese agreement titled 職位申請表and dated 11th March 2001 (“Hire Agreement”) as follows : “現將[the Tractor]連16676車架租與[the Defendant]，租金為每次柯打扣回百份之72計算。生效日期: 一月一日2001年。註: 所有該車開支，由公司 [the Plaintiff]負責。本人[the Defendant]同意通知期七天雙方便可解約”. 5.The Plaintiff further claimed that pursuant to the Hire Agreement the Defendant agreed to use the Tractor solely for carrying out the Plaintiff’s delivery orders (“Plaintiff’s Orders”). However, the Defendant was in breach thereof by making unauthorised use of the Tractor to deliver the Trailer. The Tractor was lost whilst in the Defendant’s possession in the course of such unauthorised delivery. 6.The Plaintiff claimed for the sum of HK$335,773.20 being (a) the market value of the Tractor (HK$160,000.00) and (b) loss of profits from 1st March 2002 to 28th February 2003 at an average sum of HK$14,647.77 per month (HK$175,773.20). III. Defendant’s defence and counterclaim 7.The Defendant denied the Hire Agreement and claimed the Plaintiff employed him as a CB Driver. The Plaintiff and Ching arranged for (a) Kwai Luen to maintain/repair the Plaintiff’s trailers and (b) the Plaintiff’s CB Drivers to use the Plaintiff’s container tractors to deliver trailers of Kwai Luen’s customers to Kwai Luen as directed by Ching. On 23rd February 2002, the Plaintiff’s Siu Jr orally instructed the Defendant to contact Ching for the delivery of the Trailer to Kwai Luen for repairs. As instructed by the Plaintiff and directed by Ching, the Defendant drove the Tractor to deliver the Trailer to Kwai Luen. He parked the Tractor at the PRC Carpark and discovered its disappearance on 25th February 2002. 8.By an oral agreement between the Defendant and Siu Jr on behalf of the Plaintiff made at the LT Hearing in consideration of the LT Settlement and evidenced by the Confirmation (“Oral Contract”), the Plaintiff agreed to arrange for the de-registration and release of the Defendant’s driver registration in Mainland China (脫證, “De-registration”) as soon as possible and to use best endeavours to do so within two months’ time. 9.In breach of the Oral Contract, the Plaintiff failed/refused to arrange for the De-registration. The Defendant counterclaimed for (a) specific performance of the Oral Contract and (b) loss of wages from September 2002 to March 2006 in the total sum of HK$375,671.60. Mr Ng, solicitor for the Defendant, confirmed that the Defendant would waive any claim for continuing loss after March 2006. IV. Issues 10.The issues in this case are as follows :
V. The lawon employer-employee relationship 11.I refer to the well-known test by Cooke J in Market Investigations Limited v Minister of Social Security [1969] 2 QB 173 as approved by the Privy Council in Lee Ting Sang v Chung Chi-keung [1990] 2 WLR 1173 :
12.The aforesaid principles were approved/adopted in Poon Chau Nam v Yim Siu Cheung trading as Yat Cheung Airconditioning & Electric Co CACV86/2005 (unreported, 4th and 15th November 2005). The Court of Appeal held that whether the person was an employee or independent contractor was a question of fact to be determined by the trial court. Chitty on Contracts 29th ed, Vol.2 at paras.39-010 - 39-028 at pp.943-955 also set out some of the relevant factors. VI. Witnesses and other relevant persons 13.Siu Jr became the Plaintiff’s shareholder in 1995 or 1997. At the time of trial, he was the majority shareholder, but he did not give evidence. Siu Wai Keung (Siu Jr’s father, “Siu Sr”) and Ching gave evidence for the Plaintiff. Siu Sr had been in the container transport business for about 20 years. By the time of trial, he was the Plaintiff’s 營業主任and its former shareholder/director. However, he remained in charge of the Plaintiff with the assistance of Siu Jr and was responsible for inter alia soliciting container transport business and assigning drivers to carry out the Plaintiff’s Orders. 14.Since 2000 Ching owned/operated Kwai Luen in Shenzhen although Kwai Luen did not have any PRC business licence. Kwai Luen provided repair and vehicle examination service for tractors, trailers and 噸車. At first Kwai Luen rented carparking spaces at one of several carparks of the PRC Carpark (ie the carpark across濱河路opposite to the one depicted on the plan drawn by the Defendant (“Defendant’s Plan”)) for parking trailers that required repair or maintenance (“KL Site”). The Plaintiff no longer had any business dealings with Kwai Luen after the loss of the Tractor. Due to the poor economy, Kwai Luen ceased business in March 2002. 15.The Defendant himself gave evidence and called Cheung Kam Wah (“Cheung”) as his witness. Cheung was a former CB Driver for the Plaintiff from mid-1998 to 31st May 2002 and from March 2003 to mid-January 2004. He worked as a HK Driver after leaving the Plaintiff, but was unemployed at the time of trial. Cheung came to know the Defendant about two to three years before he joined the Plaintiff. 16.In assessing witness’ credibility, I adopt the principles set out by Chung J at paragraph 12 of Star Glory Investment Ltd v Kai Tua (H.K.) Technology Ltd & ors HCA3523/2002 (unreported, 13th August 2005) :
VII. Parties’ arrangement (1) Plaintiff’s case 17.In June 1997, Siu Sr and 劉志和 (“Lau”) purchased the Tractor. Siu claimed that in September 1998 he came to know the Defendant through 阿輝 (“Fai”) of the Mainland Chinese 牌頭公司or 線主 (湖南泰和運輸有限公司, “PRC Company”), but later accepted it was possible the Defendant was introduced to him by another CB Driver李德承. 18.Siu Sr, Lau and the Defendant agreed that (a) they would all solicit business from customers, (b) Siu Sr and Lau would provide the Tractor and pay all operating expenses, (c) the Defendant would drive the Tractor and be paid if there was a delivery order, and (d) Siu Sr/Lau and the Defendant would share the price of each delivery order in the ratio of 72:28 respectively (“Joint Venture”). 19.According to the statement prepared by Siu Jr and submitted to the Tribunal prior to the LT Order (“P’s Statement”), in/about October 1997 the Plaintiff sub-contracted its delivery orders to the Joint Venture. The Defendant 自僱租車拆賬at 28% of the price of each Plaintiff’s Order whilst Siu Sr/Lau shared the balance 72% after deducting the operating expenses and the Plaintiff’s commission of HK$100.00 per delivery order. In P’s Statement Siu Jr said “[the Defendant]承接外間之拖送工程時亦可同樣地判回[the Plaintiff]以每柜$100為介紹費”. Siu Sr also confirmed that (subject to notification being given to the Plaintiff) the Defendant could accept outside work. When Siu Sr retired from the Plaintiff’s business, the Tractor together with the Defendant was transferred to the Plaintiff for management. 20.Subsequently, for the following reasons, the Plaintiff wished to make clear the Defendant hired the Tractor for rental payable to the Plaintiff at 72% of the price of the delivery orders handled whilst he received the balance 28% as income :
Siu Sr then drafted the Hire Agreement, which was signed by the Defendant and witnessed (but not countersigned) by Siu Sr and Cheung. The Plaintiff had a similar arrangement and written agreement with Cheung. The Defendant’s/Cheung’s work was the same before and after the signing of their agreements. (2) Defendant’s case 21.The Defendant and Cheung were employed by the Plaintiff as CB Drivers. The Defendant did not agree to or sign the Hire Agreement, which he saw for the first time when Siu Jr produced it at the LT Hearing. (3) Analysis 22.I refer to the detailed analysis of the factual matrix discussed below. On balance I prefer the Defendant’s/Cheung’s evidence, which I find honest and credible. The same cannot be said for Siu Sr whose evidence was unconvincing/evasive and which tended to shift as he went along, particularly when confronted with contemporaneous documents. 23.Siu Sr claimed that the Defendant did not have any入職證明書because he was not the Plaintiff’s employee. But when Siu Sr was questioned as to why Siu Jr in P’s Statement raised the query “為何唯獨是[the Defendant]有別於其他受薪司機從沒有入職證明書?” and did not mention the Hire Agreement (titled 職位申請表) or Cheung’s similar agreement, Siu Sr asserted that Siu Jr might have thought the agreements were not important or might not be aware of the need to be particular about details. I find such assertion unconvincing in face of Siu Jr’s detailed nine-page P’s Statement. I accept on balance that the Defendant (a) was not a party to the alleged Joint Venture, (b) did not enter into or sign the Hire Agreement and (c) was not an independent contractor (街車) of the Plaintiff. VIII. Business dealings between the Plaintiff and Ching/Kwai Luen 24.In/about 1999-2000, the Defendant came to know Kwai Luen/Ching. Siu Sr claimed the Defendant introduced Ching to him and thereafter Siu Sr had various business dealings with Ching. Such dealings included a restaurant 泰和樓in Mainland China (“Restaurant”), which ceased business shortly after the loss of the Tractor. Ching said but later denied he and Siu Sr operated a car repair business. By the time of trial they no longer had any business dealings. 25.But during the time when Siu Sr and Ching had business dealings, Siu Sr placed some of the Plaintiff’s trailers with Kwai Luen for repair and vehicle examination service. If the Plaintiff’s container tractors had minor problems whilst in Mainland China, Siu Sr would also ask the CB Drivers to bring them to Kwai Luen for repairs. There were also arrangements for the Plaintiff’s CB Drivers (including the Defendant and Cheung) to use the Plaintiff’s container tractors to deliver trailers of Kwai Luen’s customers to Kwai Luen for repairs (“Ching’s Orders”). Since trailer repairs usually took two days, the CB Drivers (including the Defendant and Cheung) would park their container tractors at the KL Site. When the repairs were done, they would collect/deliver the trailers back to Hong Kong. Ching/Kwai Luen would pay the delivery fees to the CB Drivers directly in cash and the Plaintiff would not take any commission. (1) Plaintiff’s case 26.At the beginning, Ching would ask Siu Sr whether any of the Plaintiff’s CB Drivers would accept Ching’s Order. Siu Sr would make the arrangements, but the CB Drivers would directly negotiate the delivery fees with Ching. The Plaintiff would not charge for the use of its container tractors, fuel consumption and other associated expenses. When Ching became more familiar with the CB Drivers, they dealt with one another directly, so Ching would only contact Siu Sr when he could not find any CB Driver. 27.Siu Sr claimed Ching had no obligation to and did not notify him of Ching’s Orders. On the other hand, the Plaintiff’s CB Drivers had to notify him and seek his approval before accepting Ching’s Orders so as to make sure no Plaintiff’s Orders would be arranged for the relevant period. Whilst Siu Sr would usually allow the Plaintiff’s CB Drivers to accept Ching’s Orders, he would not give approval if there were Plaintiff’s Orders (which had priority) pending execution. (2) Defendant’s case 28.It was the Plaintiff that arranged each of Ching’s Orders and instructed its CB Drivers (including the Defendant and Cheung) to contact Ching. The CB Drivers would act on the Plaintiff’s instructions and Ching’s directions to deliver trailers to Kwai Luen for repairs. The Defendant so carried out Ching’s Orders for about ten odd times. The Plaintiff would also be aware of such delivery trips to Kwai Luen from the Defendant’s cross-border 出入境紀錄and the slips prepared by the Defendant that set out the incurred expenses (“Expenses Slips”). These documents were submitted to the Plaintiff after each delivery trip. Siu Sr told the Defendant the delivery fees for Ching’s Orders were “外快”, so he did not record such orders in his daily work record (“Day Record”). 29.On the sole occasion Cheung carried out Ching’s Order, Siu Sr or Siu Jr instructed him to contact Ching. When he did so, Ching told him to collect a trailer and deliver it to Kwai Luen. Upon such delivery, Cheung parked his container tractor and the trailer at the KL Site and gave the keys of the container tractor to Kwai Luen’s staff to enable the repair workers to move the trailer during repairs. Both the Defendant and Cheung confirmed it was standard practice for the Plaintiff’s CB Drivers to leave the keys of their container tractors with Kwai Luen’s staff. Cheung collected the repaired trailer the following day and delivered it back to Hong Kong. (3) Analysis 30.There is little dispute on how Ching’s Orders were executed save that (a) the Defendant insisted they were done under the Plaintiff’s instructions whilst (b) the Plaintiff said they were the Plaintiff’s CB Drivers’ private side business with Ching/Kwai Luen. On balance I accept the Defendant’s/Cheung’s evidence which I find credible and consistent. 31.The evidence of Siu Sr and/or Ching does not sit well with the Plaintiff’s case. First, although Siu Sr said the Plaintiff’s CB Drivers were free to choose whether to accept Ching’s Orders, in reality they invariably accepted such delivery orders. Secondly, Siu Sr said it was up to the CB Drivers (not the Plaintiff) to negotiate/collect the delivery fees directly with/from Ching. Yet the Plaintiff had records of Ching’s Orders and the relevant delivery fees. Siu Jr said at the LT Hearing “我搵番啲record出嚟” that showed the Defendant carried out Ching’s Orders ten odd times. Siu Sr noted from the Plaintiff’s records that in the “past year” the Defendant notified the Plaintiff of thirteen Ching’s Orders for total delivery fees of HK$16,900.00 (which equated to HK$1,300.00 per delivery order). Siu Sr did not explain why the Plaintiff had knowledge/ record of such delivery fees. Thirdly and more importantly, the Plaintiff retained ultimate control on whether the Defendant, Cheung and other CB Drivers could accept Ching’s Orders. Siu Sr would not give approval if there were Plaintiff’s Orders to be carried out, which fact does not marry well with his claim that Ching’s Orders were the CB Drivers’ separate side business over which the Plaintiff had no say. 32.Further, there was no sensible reason why the Plaintiff would not receive any payment from Ching/Kwai Luen for using its CB Drivers and container tractors or why the Plaintiff had to subsidise Ching/Kwai Luen for fuel and all necessary expenses. Whilst (a) there were not many Ching’s Orders, (b) the delivery fees per Ching’s Order (say, at HK$1,300.00) were below the Plaintiff’s commercial rate and (c) there was an element of staff benefit in allowing the CB Drivers (including the Defendant) to pocket such delivery fees, on balance I reject Siu Sr’s suggestion that the sole purpose was to make the Plaintiff’s CB Drivers (especially as the Defendant introduced Ching to Siu Sr) happy. I find such magnanimous attitude improbable for a businessman like Siu Sr, who ran such a tight commercial ship at the Plaintiff that even Siu Jr was scared of him. 33.Save that it is not disputed that repair costs were cheaper in Shenzhen than in Hong Kong, the Plaintiff did not adduce evidence as to its financial arrangements with Ching/Kwai Luen for Kwai Luen’s repair and vehicle examination service for the Plaintiff’s trailers. Bearing in mind the multi-faceted business cooperation between the Plaintiff/Siu Sr and Kwai Luen/Ching at the material time, it is not improbable that savings from cheaper repair and vehicle examination service justified the discounted delivery fees or even subsidised expenses under Ching’s Orders that were carried out only on days when there were no Plaintiff’s Orders. 34.I prefer the Defendant’s/Cheung’s evidence and find that the Plaintiff maintained control of Ching’s Orders and gave instructions to the Plaintiff’s CB Drivers (including the Defendant and Cheung) in relation to the same. IX. Identifying the relationship between the parties 35.The aforesaid test by Cooke J identified a number of factors for determining the relationship between the parties. Upon a careful balance, I find they lead to the conclusion that the Defendant was the Plaintiff’s employed CB Driver. (1) Control and superintendence 36.Siu Sr solicited most of the Plaintiff’s Orders and together with Siu Jr assigned them to the Defendant and other drivers. Siu Sr said the Defendant could not refuse such assigned delivery orders without very good reasons. Although the Defendant’s income varied according to the number of delivery orders carried out, he did not participate in the management of the Plaintiff’s business and had no right of refusal over the Plaintiff’s Orders assigned to him. 37.Siu Jr stated in P’s Statement that “[the Defendant]亦曾因覺得[the Plaintiff]所接的工程費不滿意而拒絕承運並選擇承接其他行家之工程或索性到地盤做兼職散工”. He went on to say in P’s Statement that the Defendant “可隨意接自己客戶之工程及各自收錢” and “基於[the Defendant]是以街車身份承接[the Plainitiff]之運輸工程,他可自由承接屬於[the Plaintiff]或他自己客戶之orders”. I reject these contentions, noting that Siu Sr said (a) the Defendant could not refuse the Plaintiff’s Orders, which had priority over Ching’s Orders, and (b) the Defendant did not introduce any customer to the Plaintiff other than Ching. So in reality the Defendant was bound to carry out the Plaintiff’s Orders assigned to him. 38.Such conclusion is consistent with the Defendant’s and Cheung’s evidence (which I accept) that all their delivery orders were assigned by Siu Sr/Siu Jr and they could not decline any of them. I find on balance the Plaintiff did not allow and the Defendant/Cheung did not use the Plaintiff’s container tractors to carry out any unauthorised outside delivery jobs. ( 2) Any prospect of profit or risk of loss? 39.In my view, the Defendant had no financial risk. He did not have to hire help or invest in the business. The Plaintiff was responsible for collecting delivery fees from its customers (other than Ching) and for each Plaintiff’s Order (other than Ching’s Order) 28% of the delivery fees would go to the Defendant whilst the Plaintiff would retain the remaining 72% as its income and for defraying repair costs, fuel charges and all necessary expenses. 40.I reject Siu Sr’s claim that if the Defendant directly/ indirectly caused extra expenses to be incurred (say, repair costs of the Tractor arising from a traffic accident) or reduction in receipts from customers (say, due to the Defendant’s poor work attitude), the Defendant would have to bear 28% of such expenses or loss. Such assertion was not mentioned in Siu Sr’s witness statements or in the Hire Agreement (which I have rejected). (3) Part of the Plaintiff’s organisation? (4) Carrying on business on own account or for the Plaintiff? 41.The Defendant did not have any business registration and the Plaintiff’s staff would present the Plaintiff’s business registration certificate to deal with the shipping companies and all necessary procedures. I prefer the Defendant’s evidence that the Plaintiff never requested him to have any business registration, which suggests that the Defendant was not a business proprietor and that he carried out the Plaintiff’s Orders for the Plaintiff and not on his own account. ( 5) Power of selection/appointment and to dismiss/suspend 42.Siu Sr’s evidence indicated the Plaintiff had the power of dismissal. Siu Sr claimed that when the Defendant previously carried out the Plaintiff’s Orders he would “illegally” change new tyres for the Tractor and “smuggle” them into Mainland China for profit. Siu Sr claimed that when he confronted the Defendant, the Defendant explained that he was short of funds but promised it would not happen again. It is interesting to note that Siu Sr emphasised the Plaintiff would have dismissed the Defendant had his “smuggling” interfered with the timely performance of the Plaintiff’s Orders. Siu Sr added he had warned the Defendant any further “smuggling” activity would lead to dismissal and report to the police. 43.Siu Sr claimed the Defendant took revenge by abusing the Tractor thus causing the repair charges payable by the Plaintiff to increase to HK$39,225.00 in the following few months. Siu Sr warned the Defendant that if he continued to cause damage to the Tractor, he would get fewer Plaintiff’s Orders and would have to pay 30% of the repair charges. 44.Mr Chan, solicitor for the Plaintiff, made no attempt to cross-examine the Defendant on these subjects. I am of the view that the aforesaid alleged events are not probative of the issues of the present case apart from demonstrating that even on the Plaintiff’s own case it had the power of dismissal and control over the Defendant’s work. (6) Payment of wages or salary 45.The Plaintiff collected delivery fees from its customers and the Defendant took 28%. I accept such payment method was standard in the container transport trade, but it is no different from paying wages to an employee at a piece rate. 46.At the beginning of the month, the Plaintiff would advance to each CB Driver (including the Defendant and Cheung) about HK$10,000.00. Siu Sr claimed he would not bother to check the expenses incurred for each delivery order, but I accept on balance that upon completion of each delivery order the Defendant would fill out the Expenses Slip and submit the same to the Plaintiff together with the receipts for the incurred expenses, the mate’s receipt and 出入境紀錄. The Plaintiff would reimburse the Defendant in about a week’s time by crediting his bank account. 47.The Defendant would fill out the particulars for the standard form Day Record including date, reference, client/destination, container number, container size, various types of expenses (eg ¥，橋費，關場，油費，維修保養，查車，隧道and什項) as well as salary (薪金). Siu Sr could not satisfactorily explain why the Plaintiff’s standard form adopted the description 薪金. He could only weakly say he did not pay attention to the form that was prepared by the Plaintiff’s accounting staff. 48.From the Expenses Slip and Day Record, the Plaintiff’s accounting staff would calculate the monthly amount payable to the Defendant after taking into account the advance payment and incurred expenses. At the time of payment, the Plaintiff would give the Defendant a standard form什支對賬表setting out the incurred expenses for the Tractor, the advance payments, 什支扣除借貸, 本月薪金, MPF, total sum payable as well as the relevant cheque number (“Month Record”). Siu Sr could not satisfactorily explain why the Plaintiff’s standard form Month Record for the Defendant adopted the descriptions 薪金 and MPF. 49.In my view, the above arrangements reflected that the Defendant was paid wages as an employee. Although the situation was complicated by advance payments and expense reimbursements, it is clear it was the Plaintiff that received delivery fee payments from its customers (with whom the Defendant/Cheung had no financial contact) out of which a fixed portion of 28% was paid to the Defendant. (7) Fixing of times and place of work 50.The Defendant had no fixed working hours since 皇崗口岸 was open 24 hours. Usually the Plaintiff would assign the Plaintiff’s Orders to the Defendant a day before or even on the same day if urgent. The Defendant was required to carry out the delivery order on the day specified unless there was a good/acceptable reason (failing which Siu Sr would issue a warning to the Defendant). 51.Apart from the first two days of the lunar year when the container terminal closed for business, the Defendant did not have any fixed annual leave. But if there were no Plaintiff’s Order, that day would be a rest day for the Defendant. The Defendant could not decline to carry out the Plaintiff’s Orders unless leave was approved, and unless there was a good reason Siu Sr would refuse a request for leave if there were Plaintiff’s Orders to be executed. The above evidence plainly shows the Plaintiff exercised control over the Defendant’s work and leave. (8) Personal performance 52.Each CB Driver was registered with the Mainland Chinese authorities for driving a particular container tractor. When the Defendant started to work for the Plaintiff, he had to 入線 (ie register 牌頭黃簿 or出入境簿 in his name, “Registration”). This meant there would be no substitute driver for the Tractor in Mainland China. (9) Provision of equipment and ownership of assets 53.The Plaintiff provided the Tractor and was responsible for its repair/maintenance. The Defendant did not bring any equipment to the job. If the Plaintiff’s drivers had no work for the day, they could park their container tractors at the Plaintiff’s Lok Ma Chau or Kwai Chung yards or at locations in Mainland China approved by Siu Sr. The Defendant parked the Tractor at the Lok Ma Chau yard since it was free (ie the Plaintiff paid the monthly fees) and had better security (ie a repair worker would stay overnight at the yard). But when the Plaintiff’s CB Drivers (including the Defendant and Cheung) carried out Ching’s Orders, they usually parked their container tractors at the KL Site with Siu Sr’s consent. In my view, the Plaintiff provided the relevant equipment and exercised control over the same. (10) Incidence of tax and MPF 54.Tax Siu Sr claimed that since the Defendant was self-employed, the Plaintiff lodged a form titled 支付薪酬給僱員以外人士的通知書 for the year ending 31st March 2002 to the Inland Revenue Department (“IRD”) stating that the Defendant’s 承判金 for the service period from 1st April 2001 to 31st March 2002 was HK$150,644.00. This document was dated 22nd April 2002, ie after the loss of the Tractor. 55.On the other hand, the Defendant/Cheung claimed the Plaintiff never required them to submit tax (presumably profits tax) returns on their own. Historically the Plaintiff lodged employer’s return for salaries tax to the IRD (eg the Plaintiff’s employer’s returns for the Defendant for the years ended 31st March 2000 and 31st March 2001 respectively, “Employer’s Returns”) stating it employed the Defendant as a “DRIVER” and paid him “Salary/Wages”. The IRD also issued a notice of assessment and demand for salaries tax for 1999/2000 to the Defendant. Siu Sr confirmed the Plaintiff treated Cheung in a similar manner. 56.Siu Sr claimed the Plaintiff was obliged to lodge the Employer’s Returns, but could not satisfactorily explain why they were for salaries tax when the Plaintiff claimed the Defendant only hired the Tractor. Siu Sr’s various reasons, which evolved as he went along, were unconvincing :
In the end, Siu Sr was constrained to acknowledge he knew all along the Plaintiff should not submit an Employer’s Return for salaries tax for a non-employee. 57.But Siu Sr claimed the Defendant’s/Cheung’s case was exceptional. He said it was the Defendant who asked the Plaintiff to lodge such Employer’s Returns. Further, Siu Sr claimed that of the Plaintiff’s four to five CB Drivers two of them had their own business registrations and submitted their own tax (presumably profits tax) returns, but the Plaintiff did not know what to do with the Defendant/Cheung who did not have business registrations, so it submitted the Employer’s Returns for salaries tax even though Siu Sr knew they were self-employed. I find such contentions unconvincing :
58.In light of the Employer’s Returns, it is stranger still for P’s Statement to query “[the Defendant]為何無須繳立薪俸稅呢?” and to state “[the Plaintiff]在過往的核數師報告內，亦按[the Defendant]的意願及雙方的協議下將[the Defendant]所得之報酬全數以街車身份報稅的，而從沒有視[the Defendant]為僱員而為他報薪俸稅”. When asked about this, Siu Sr was only able to say he did not draft P’s Statement or attend the LT Hearing. The Plaintiff’s stance is unreliable, and I find on balance the Employer’s Returns and the Defendant’s payment of salaries tax speak eloquently of his status as an employee. 59.MPF The Plaintiff (named as the Defendant’s employer in his MPF membership certificate) made MPF contributions for the Defendant from 1st December 2000 to 28th February 2002. Siu Sr knew such conduct might suggest that the Defendant was the Plaintiff’s employee, but said it was done out of pity for the Defendant. He claimed the Defendant said he did not have enough money and asked the Plaintiff to make the MPF contributions on his behalf. Siu Sr said the same situation applied to Cheung. But if the genesis of the Hire Agreement (which agreement I have rejected) was Siu Sr’s concern that the Tribunal had found other CB drivers were employees following MPF contributions, the Plaintiff’s payment of MPF contributions during the post-Hire Agreement period from 1st March 2001 to 28th February 2002 is inexplicable. When so confronted, Siu Sr surprisingly denied he ever gave evidence of such genesis. I find his evidence unreliable. 60.Interestingly, Siu Jr gave a somewhat different explanation. In P’s Statement, Siu Jr claimed the Defendant threatened to leave the Plaintiff if the latter did not make MPF contributions on his behalf, “故在雙方同意下以津貼形式額外將28%報酬中另加上作為留車留人之條件,並強調此乃順應[the Defendant]之要求……為保障雙方的利益，本人遂要求[the Defendant]簽署了[the Hire Agreement]為實”. 61.I am not persuaded by Siu Sr’s or Siu Jr’s explanations and find on balance the Plaintiff made MPF contributions for the Defendant because it knew and regarded him as its employee. (11) Acknowledgment/admission 62.I am not prepared to accept the Defendant’s claim that the provision for payment by the Plaintiff to the Defendant under the LT Settlement amounted to an acknowledgment/admission that the Defendant was its employee. After all, a settlement might well be motivated by various factors, including those extraneous to the proceedings. (12) Traditional structure of the trade concerned 63.Siu Sr claimed it was well known in the container transport services trade that CB Drivers would only be paid if there were delivery orders, but it does not necessarily follow such manner of payment meant they are independent contractors. (13) Miscellaneous 64.On 24th April 2001 Siu Jr as the Plaintiff’s director completed a Return of Employee’s Remuneration for the Year Ended 31st March 2001 to enable the Defendant’s daughter apply for education subsidy. Such document described the Defendant as the Plaintiff’s employed CB Driver who was paid “Salary/Wages”. Siu Jr signed the document as “Employer”. (14) Summary 65.Having considered all the circumstances and the credibility of the witnesses, I find on balance the Defendant was the Plaintiff’s employed CB Driver engaged in Hong Kong-Mainland China cross-border transportation services for the Plaintiff. X. Loss of the Tractor (1) Plaintiff’s case 66.After completing the Plaintiff’s Order on 22nd February 2002, the Defendant should have parked the Tractor at the Plaintiff’s Lok Ma Chau yard as there was no work for the following two days. On 23rd February 2002, upon the Defendant’s enquiry for work, Ching told him to deliver the Trailer to Kwai Luen and leave it at the PRC Carpark. Neither Ching nor the Defendant notified the Plaintiff of this job. 67.When the Defendant arrived at the PRC Carpark, Ching met him there because Kwai Luen was no longer at the KL Site (which had been rebuilt). Kwai Luen borrowed the use of certain carparking spaces of a Mainland Chinese garage operated by 四眼蔡 at the carpark of the PRC Carpark shown on the Defendant’s Plan (“New Site”). After telling the Defendant to drive the Tractor away and to pick up the Trailer on 25th February 2002, Ching hurried back to the Restaurant without checking whether the Defendant actually drove the Tractor away. At that time Kwai Luen only had two casual repair workers who would come over to the PRC Carpark when there was work to be done. Ching arranged for them to come over to the New Site that evening to repair the Trailer. Neither Ching nor四眼蔡had any employee by the name of 財叔. 68.On 25th February 2002 the Defendant reported to Ching and Siu Sr that the Tractor had disappeared. The Defendant confessed to Siu Sr he drove the Tractor to Shenzhen to carry out Ching’s Order. Siu Sr was surprised that he had not been notified. The Plaintiff sent staff to accompany the Defendant to report the loss of the Tractor to the Public Security Bureau (“Bureau”). Ching subsequently paid the delivery fee of HK$1,300.00 to the Defendant. (2) Defendant’s case 69.On 23rd February 2002, Siu Jr orally instructed the Defendant to contact Ching who had a Trailer for delivery to Shenzhen for repairs. The Defendant telephoned Ching and at his directions collected the Trailer from Tuen Mun for delivery to the New Site (which he had been to several times). The Defendant did not see Ching at the PRC Carpark, so he parked the Tractor and Trailer at the New Site and gave the Tractor’s key to 財叔 as Ching directed. 財叔 told him the repairs would take two days. Only later that evening did the Defendant see Ching and Siu Sr at the Restaurant. When the Defendant returned to the New Site on 25th February 2002, the Tractor had disappeared. He immediately telephoned Siu Sr who instructed him to report to the Bureau (which the Defendant did). Ching subsequently paid the delivery fee to the Defendant. (3) Analysis 70.Siu Sr claimed (a) the Bureau’s staff told him many lost container tractors were stolen by drivers/theft rings and (b) the Defendant did not notify him this time in order to dispose of the Tractor. But there is no pleading to such effect and no cogent evidence to support such serious assertion. Siu’s evidence coloured by such unsupported assertion is unreliable. I also do not accept Ching’s evidence and prefer the Defendant’s evidence, which I find to be honest and truthful. 71.On balance I do not accept that the Defendant failed to inform the Plaintiff of Ching’s Order for delivering the Trailer to Kwai Luen. There was no reason for the Defendant to do so for he could not have kept the delivery of the Trailer to Shenzhen a secret. Siu Sr agreed there would be 出入境紀錄 and deduction of requisite charges from a value card purchased by the Plaintiff for use by the Defendant. The Defendant would refuel at designated fuel stations and the Plaintiff would settle fuel charges on receipt of monthly statements of account. Had the Defendant made an unauthorised delivery trip to Shenzhen with the Tractor, it would have been obvious from the records. Siu Sr claimed he never checked the records, but admitted the Plaintiff’s accounting staff kept and updated a separate ledger book for each container tractor and would report anything unusual to him, whereupon he would cause an investigation. 72.There was nothing unusual about leaving the Tractor at the PRC Carpark since trailer repairs usually took two days. Siu Sr agreed he all along allowed the Plaintiff’s CB Drivers to leave the container tractors with Kwai Luen overnight. There was no reason for the Defendant to hide such fact from the Plaintiff. 73.I find Siu Sr’s claim that the Defendant told him the Tractor’s key was lost because it was left inside the Tractor to enable repair workers to move the Trailer incredible. I prefer the Defendant’s evidence that he gave the key to 財叔. Both the Defendant and Cheung confirmed the usual practice was to leave the key of the container tractor with the repair workers to enable them to move the trailer during repairs. Even Siu Sr/Ching admitted the Plaintiff’s CB Drivers sometimes did so. Further, Siu Sr’s assertion that all garages kept vehicle keys at their offices to avoid theft also implicitly supported the Defendant’s/Cheung’s assertion. Hence, there is no reason for the Defendant to hide such usual practice from the Plaintiff. I also accept the Defendant’s evidence that in fact財叔returned the Tractor’s key to the Defendant, who did not pass it back to the Plaintiff because he believed it served no purpose with the loss of the Tractor. 74.I find on balance the Tractor was lost under circumstances as described by the Defendant. There was no Hire Agreement and no breach thereof. But even if I am wrong, the Plaintiff’s claim for loss and damages is doomed from the start. XI. Plaintiff’s claim for loss and damages 75.Other than a bare assertion in Siu Sr’s witness statements and in P’s Statement, there is no evidence the Tractor’s market value was HK$160,000.00. The brief letter from Roger Houghton Motor Surveys Limited to the Plaintiff dated 10th August 2004 stated that “on reviewing the information [the Plaintiff] faxed”, they calculated the Tractor’s market value at HK$130,000.00-HK$140,000.00 as at February 2002 (“Surveyor’s Letter”). 76.Several observations are immediately apparent. First, the Surveyor’s Letter does not support the Plaintiff’s claim in respect of the Tractor’s market value. Secondly, the Plaintiff has not applied for any expert directions for adducing expert opinion evidence. Thirdly, it is unknown what information was provided to the motor surveyor for it to reach its opinion. Fourthly, there is no evidence of Siu Sr’s experience/expertise in assessing/opining on the Tractor’s market value. I do not consider the aforesaid evidence admissible or reliable. 77.Other than a bare assertion in Siu Sr’s witness statements, the Plaintiff did not adduce any evidence in support of its pleaded average monthly loss of profits of HK$14,647.77. There is also no satisfactory explanation why the period of loss was one year from 1st March 2002 to 28th February 2003. 78.More importantly, the claimed value of the Tractor and/or loss of profit are too remote. Mr Chan confirmed that the Plaintiff’s sole cause of action was for breach of the Hire Agreement in respect of the alleged unauthorised delivery and there was no claim for any breach of duty of care to keep the Tractor safe or to take reasonable precautions from loss/theft. Mr Chan was constrained to agree that the tortious “but for” test was inapplicable. 79.Under the Hadley v Baxendale rule, loss and damages that can be recovered under the contractual measure of damages is such damages (a) as may fairly and reasonably be considered as arising naturally from the breach of contract or (b) as the parties should reasonably have contemplated would flow from the breach as having a substantial degree of probability. What both parties contemplated is based on an objective test, ie what the courts believe the parties as reasonable men would have contemplated on the information available to them at the time of contract. If, however, there are special circumstances which have been communicated or made known to the contract breaker, the damages are such that the parties should reasonably contemplate to flow from the breach in such special circumstances. Here, knowledge on the part of the contract breaker, whether actual or imputed, is necessary. I refer to Paul Chen & anor v Lord Energy Limited (2002) 5 HKCFAR 297 for the above principles. 80.Even if the Defendant were in breach of the Hire Agreement (which I disagree), such breach relates to an unauthorised use of the Tractor. In such circumstances, loss and damages under the Hadley v Baxendale rule may theoretically include, say, secret profits earned by the Defendant and/or expenses incurred for such delivery trip. However, Siu Sr admitted there were no Plaintiff’s Orders for 23rd to 25th February 2002 for the Defendant, so there would not have been loss of profits for the alleged unauthorised delivery of the Trailer to Kwai Luen. Further, although it might be argued that “but for” the Defendant making the alleged unauthorised delivery the Tractor would not have been in Shenzhen and would not have been lost, it is difficult to envisage such loss/theft as arising naturally from an unauthorised delivery trip or as a probable loss flowing from such breach as contemplated by the parties at the time when the Hire Agreement was made. 81.I find the Plaintiff has failed to establish any breach of the Hire Agreement or its claimed loss and damages, so its claim is dismissed. I now turn to the Defendant’s counterclaim. XII. Defendant’s counterclaim : specific performance of the Oral Contract and/or the Confirmation 82.The PRC Company was the licence holder of the Tractor in Mainland China. When the Defendant joined the Plaintiff, he had to 入線as the CB Driver for the Tractor in Mainland China (ie the Registration). Thereafter he could not drive any other China-Hong Kong cross-border container tractor until his De-registration. (1) De-registration and payment of the customs tariff 83.There is no dispute that as a result of the loss of the Tractor (“Loss”), the PRC customs authority (“Customs”) levied customs tariff at the then value of the Tractor (原價補稅, “Tariff”). Siu Jr admitted in P’s Statement that “……根據大陸海關的規定，凡於大陸遺失車輛一概當其變賣，所有車主要負責補回稅金”. There is also no dispute that the De-registration should be done via the PRC Company and the Plaintiff was responsible for the requisite charges. 84.Siu Sr claimed the Defendant should have applied directly to the PRC Company to arrange for the De-registration, but I prefer the Defendant’s evidence that (a) the Plaintiff should pay the Tariff as a result of the Loss and arrange the De-registration, (b) payment of the Tariff was a prerequisite for the De-registration, and (c) the Plaintiff failed and/or refused to pay the Tariff. After all, the Defendant was not responsible for the requisite De-registration charges, and did not know the Plaintiff’s arrangements with the PRC Company or the monthly service fee for the Tractor payable by the Plaintiff to the PRC Company (“PRC Service Fee”). 85.Siu Sr admitted that about a week after the Loss, he contacted Fai and was told the Plaintiff had to pay the Tariff. Siu Sr was upset over the Defendant’s report of the Loss to Customs. But the aforesaid background shows that the Plaintiff knew (a) it had to pay the Tariff and (b) investigation by Customs was inevitable. Siu Sr’s concern over the Defendant’s report to Customs foreshadowed the Plaintiff’s unwillingness to pay the Tariff. 86.Siu Sr claimed that within a month of the Loss (ie March 2002) Fai told him the Tractor’s value was RMB140,000.00 and the Tariff payable was RMB130,000.00-RMB140,000.00. But Siu Sr’s witness statements stated he only came to know of the same between July and September 2002. Yet Siu Sr gave evidence there was no contact between him and Fai about the De-registration or the Tariff between 2nd July and 2nd September 2002, and Siu Jr did not notify him of any contact with Fai (which Siu Jr would have done had there been such contact). Siu Sr’s explanation for the above discrepancies (ie he forgot the date) is weak and unsatisfactory. I find his evidence unreliable. Even so it is plain the Plaintiff knew at an early stage the Tariff was chargeable at the then value of the Tractor. 87.Siu Sr claimed the amount was unreasonable and he told Fai the Plaintiff would not pay. He said about one to two or several months later (but he was unsure whether it was before or after the LT Hearing), Fai told him the Tariff might be negotiated down to RMB70,000.00-RMB80,000.00, but Siu Sr still would not pay, saying that the Plaintiff had no money. He urged Fai to negotiate for further reduction. 88.Siu Sr did not refer to the sum of RMB70,000.00-RMB80,000.00 in his witness statements. He suggested that such sum was merely Fai’s proposal, which was not confirmed by Customs. In my view, even before the LT Hearing the Plaintiff knew it had to pay the Tariff of about RMB70,000.00. Siu Jr stated in P’s Statement that “(2)大陸海關補稅金約7萬……”. At the LT Hearing, he also said “…… [the PRC Company]因為要甩咗的證……牌頭都諗緊計，所以個數係牌頭話比我聽大約70,000……”. The so-called uncertainty (which I reject) was Siu Sr’s unilateral wish for further reduction. 89.Siu Sr claimed that in the following two to three months, the PRC Company pressed the Plaintiff to pay the Tariff, which I find reasonable since the ultimate obligation to pay fell on the owner of the Tractor, namely, the Plaintiff. Siu Jr admitted as much in P’s Statement (see paragraph 83 above) and at the LT Hearing as follows :
90.But quite strangely Siu Sr never told Fai that the Plaintiff would be willing to pay the Tariff in the sum of RMB10,000.00-RMB20,000.00 although his professed wish was to arrange the De-registration as soon as possible to enable the Defendant to become a CB Driver again. I find such reticence a reflection of the Plaintiff’s unwillingness to pay the Tariff. 91.Siu Sr admitted that before and after the LT Hearing the Defendant followed up with him about the De-registration. Siu Sr claimed he told the Defendant he had asked Fai to proceed with the De-registration first and the Tariff could be sorted out later (ie “我哋條數慢慢商量”). Siu Sr could not be sure whether this was said before or after the LT Hearing. On balance I am not persuaded Siu Sr told the Defendant or Fai so. Indeed, Siu Sr gave evidence that by two to three months after the Loss (ie about June 2002) (a) he had no further discussion with Fai and (b) Siu Jr did not notify him of any contact with Fai (which Siu Jr would have done had there been such contact). 92.I further reject Siu Sr’s assertions that (a) the Defendant could have applied to the PRC Company for De-registration without the Plaintiff’s cooperation, (b) the De-registration could be arranged before sorting out the Tariff, (c) Fai never told him that payment of the Tariff was a precondition for the De-registration, (d) Fai would not talk to him about the De-registration and/or (e) it was the Defendant who failed to contact the PRC Company to arrange for the De-registration. 93.First of all, such contentions defy common sense. There is no doubt the Defendant was anxious to achieve De-registration as soon as possible. Further, the Defendant had been in contact with the PRC Company at an early stage in relation to the De-registration (see 司機交回證件給與公司辦理註銷手續交收表dated 10th March 2002 which showed that the Defendant had submitted his 司機禁區證, 海關簽證簿 and 出入境車輛及貨物驗檢疫申報簿(藍簿) to the PRC Company). If the Defendant had been able to arrange the De-registration through his own liaison with the PRC Company, there is no reason why he would not simply do so. 94.Secondly, the contentions also defy commercial sense. The Defendant had every financial incentive to proceed with the De-registration if he could have done so through his own liaison with the PRC Company. As seen below, he could have earned more as a CB Driver. 95.Thirdly, Siu Sr’s contentions do not sit well with the letter from the Container Transportation Employees’ General Union (“Union”), a union for container tractor drivers of which the Defendant was a member, to the Small Claims Tribunal dated 12th February 2003, which stated that “……首先，因為國內要辦理註銷證件一定要國內法人代表(即線主)才能辦理註銷手續，司機本人是沒辦法自己處理的 …… 另外如果國內失車，內地海關不理什麽原因引致都要車主繳交車輛稅金，因海關要求每一間公司是有責任購買車輛關稅金，但如果公司沒有購買車輛關稅金而發生失車事件時，公司就要負責補交車輛的稅金，如果公司不補回車輛關稅金，司機就不能轉到別的公司繼績工作” (my emphasis). 96.Despite Siu Sr’s claim that Fai never told him that payment of the Tariff was a prerequisite for the De-registration, he became aware of this requirement after seeing such letter in the course of litigation. Yet he never liaised with Fai to find out if what was said in the letter was correct and if so, to ascertain the Tariff amount and/or the steps required for facilitating the De-registration. In my view, such inaction showed the Plaintiff’s unwillingness to pay the Tariff. 97.Fourthly, Siu’s Sr asserted in his third witness statement made on the first day of trial that he followed up with the PRC Company whenever the Defendant chased him on the De-registration, but he did not know why it was not yet arranged. This is contradicted by his evidence that he ceased liaison with Fai a few months after the Loss. Further contradiction was elicited during cross-examination when Siu Sr said the De-registration had already been done. Siu Sr claimed that since the PRC Company was not receiving the PRC Service Fee of RMB6,500.00 per month from the Plaintiff after the Loss (although Siu Jr at the LT Hearing told the Tribunal that the Plaintiff was still paying the PRC Service Fee despite the Loss), it must have already effected the De-registration so as to register another driver and container tractor in order to earn service fee income. Siu Sr further contended that the PRC Company’s conduct in engaging debt collectors to chase the Plaintiff for payment suggested the PRC Company had already paid to the Tariff. Siu Sr claimed that the Defendant still erroneously pursued the Plaintiff for the De-registration because the Defendant failed to check with the PRC Company or the relevant authorities. In my view, Siu Sr was plainly making up his evidence as he went along to justify the Plaintiff’s non-payment of the Tariff. I find the above contradictions speak strongly of the unreliability of his evidence which I reject. 98.Fifthly, I am persuaded that if the Defendant could have handled the De-registration on his own and if payment of the Tariff was not a prerequisite, Siu Sr would have been told so already and the PRC Company would not have written to the Defendant’s solicitors on 24th January 2006 inter alia to the effect that the Plaintiff must liaise with the PRC Company in relation to the De-registration (ie “……有關司機范志海要求脫証之事。此事必須由泰和(中港)貨櫃服務有限公司蕭敬賢先生與公司聯絡處理”). Such letter was consistent with the Union’s letter and supportive of the Defendant’s stance (which I accept) that he all along maintained contact with the PRC Company who was sympathetic to his situation and willing to proceed with the De-registration once the Tariff and requisite charges were paid by the Plaintiff. 99.Sixthly, Siu Sr suggested the Plaintiff did not pay the Tariff because the Plaintiff never received any receipt/invoice showing the quantum of the Tariff payable or the receiving party. There is no evidence that Customs would issue a receipt/invoice prior to payment of the Tariff. In any event, the Defendant was not responsible for finding out about these matters. Rather, it was up to the Plaintiff that was responsible for paying the Tariff to liaise with the PRC Company or Customs to ascertain the amount and make payment accordingly. 100.I find that the Plaintiff refused to pay the Tariff because (a) Siu Sr blamed the Defendant for the Loss and felt the Defendant was “咎由自取”, (b) the Plaintiff/Siu Sr thought Customs would chase the PRC Company and not the Plaintiff and (c) they blamed the PRC Company for failing to advise them to purchase insurance (關稅保) to cover the risk of the Loss. Siu Sr’s evidence was coloured by such considerations and is unconvincing and unreliable. 101.I accept the Defendant made enquiries with the PRC Company, the Bureau and Customs as to the relevant procedure for the De-registration. In three months following report of the Loss, the Bureau completed its investigation and Customs checked the Defendant’s records and 黄簿. They established that the Defendant was clean. In the next three months, arrangements would have to be made for placing a newspaper advertisement in respect of the Loss and to ascertain from Customs the amount of the Tariff. The Plaintiff had to pay the Tariff before the PRC Company could apply to Customs for the De-registration. The Plaintiff refused to pay the Tariff. 102.In summary, it is improbable that the Defendant and the PRC Company (both of whom had every incentive to achieve De-registration) would hold back had they been able to arrange the De-registration on their own. The only sensible explanation is that the Plaintiff’s cooperation, namely, payment of the Tariff and all requisite charges, was lacking and this obstructed the De-registration. ( 2) LT Hearing, the Oral Contract and the Confirmation 103.I accept that in discussing the terms of the LT Settlement at the LT Hearing, the Defendant raised the issue of the De-registration as a precondition. At first Siu Jr said the Plaintiff would “儘量” assist the Defendant in respect of the De-registration and further agreed the Plaintiff would “儘快去搞架喇”. The Defendant was not satisfied with the Plaintiff’s verbal promise of “儘快幫[the Defendant]甩”, so Siu Jr agreed to give a written confirmation. The Defendant requested for the De-registration to be done within 1 month. When the Presiding Officer said “佢致多都係儘快去幫你做，但係如果一個月都做唔到，點算呀，唔通拉佢坐監呀，唔得架嘛”, the Defendant said “我好難接受”. So the Presiding Officer asked Siu Jr whether a firm deadline for De-registration could be given. Siu Jr tried to explain that the Plaintiff was awaiting the result of the Bureau’s investigation and that time was needed for the PRC Company to find a replacement. The Defendant complained that the Plaintiff was stalling over the payment of the Tariff and pressed for a deadline for the De-registration. So Siu Jr promised “儘快去幫佢做喇” and even said “我唔甩，個線主都唔肯過我”. 104.However, as regards the timing of the De-registration (in contra-distinction to the obligation to arrange the De-registration), the parties had the following to say at the LT hearing :
105.From a plain reading of the Confirmation as consistent with the Oral Contract reached at the LT Hearing (see above), the Plaintiff clearly agreed that it would (a) arrange the De-registration as soon as possible (“榷認儘快會做脫證之手續”, “Limb (a)”) and (b) use best endeavours to do so within two months, that is, before 2nd September 2002 (“儘量在二個月內，即9月2日之前”, “Limb (b)”). I disagree with Siu Sr’s suggestion that the Plaintiff only “承諾儘量協助[the Defendant]脫証”. 106.I agree with Mr Ng that to arrange the De-registration “as soon as possible” under Limb (a) meant the De-registration was to be done within a reasonable time with an undertaking to do so in the shortest practicable time having regard to the circumstances surrounding the making of the contract (Lewison, The Interpretation of Contracts (2004) para.14.10 and The Hydraulic Engineering Co, Ltd v McHaffie, Goslett, & Co (1878) 4 QBD 670). Such view is consistent with Siu Jr’s promise at the LT Hearing to “儘快去幫佢做喇”. 107.Siu Sr admitted that under normal circumstances De-registration would take one to two months. The Defendant accepted that following the Loss it would take about six months counting from the report of the Loss to the Bureau (ie by late August 2002 given that the Loss and the report to the Bureau occurred in late February 2002). This coincides with the period of two months (ie before 2nd September 2002) as agreed by the parties at the LT Hearing and reflected in the Confirmation. In my view, upon considering all the circumstances, “as soon as possible” (儘快) under Limb (a) meant two months. But whether it was two or six months, such reasonable and shortest practicable period is now long past. 108.Under Limb (b), the Plaintiff had to use its best endeavours (儘量) to have the De-registration done within two months (ie before 2nd September 2002). However, this relates to timing and not the Plaintiff’s agreement to arrange the De-registration under Limb (a). The above interpretation is also consistent with what passed at the LT Hearing set out in paragraphs 103-104 above. 109.From the above analysis, it is plain the Plaintiff did not use best endeavours. Siu Sr admitted that after giving the Confirmation, the Plaintiff did not further liaise with Fai to see to the payment of the Tariff (which I have found to be a precondition for the De-registration) or the progress of the De-registration even though his witness statements suggested he liaised with the PRC Company between July and September 2002. Siu Sr further confirmed the Plaintiff did not contact Fai from 2nd September 2002 to the present trial. The Plaintiff also had not paid the Tariff to date. Essentially, the Plaintiff did practically nothing after making the Oral Contract and/or the Confirmation let alone use best endeavours. 110.I therefore find the Plaintiff was/is in breach of the Oral Contract and the Confirmation and as a result of such breach the Plaintiff issued a complaint letter to the Tribunal on 19th December 2002 requesting for cancellation of the LT Settlement. The Tribunal informed the Defendant to apply to the District Court. (3) Specific performance 111.Specific performance is a discretionary remedy. The question is whether it is just and fair to grant it. Here, I have found the Defendant could not have arranged for the De-registration himself or through his unilateral liaison with the PRC Company. De-registration could not be achieved without the Plaintiff’s cooperation, including its payment of the Tariff and the requisite De-registration charges. Such payment is part of the Plaintiff’s obligations under the Oral Contract and/or the Confirmation both to arrange the Deregistration as soon as possible and to use best endeavours to do so. Here damages would be an inadequate remedy because unless and until the Plaintiff arranged the De-registration, the Defendant could not work as a CB Driver. In my view, the Plaintiff well knew but chose not to perform its obligations under the Oral Contract and/or the Confirmation. In such circumstances, a decree of specific performance is eminently appropriate. XIII. Defendant’s counterclaim : loss of wages 112.Siu Sr said that in 2002 an average CB Driver would earn about HK$10,000.00-HK$20,000.00 per month. According to the Defendant’s tax returns, his average monthly earnings as the Plaintiff’s CB Driver were as follows :
The Defendant explained that his average monthly earnings in 2002 were lower than the market average of HK$15,000.00-HK$20,000.00 because the Plaintiff did not have a lot of business. At the material time, the number of Plaintiff’s container tractors was reduced from nine to four. The above evidence from both parties in relation to the earnings of the CB Drivers is consistent with the information from the Union that the average monthly wages of a CB Driver from 2002 to March 2006 were HK$18,000.00 and I adopt such amount as the average monthly earnings of a CB Driver over the relevant period. 113.I accept that by reason of the Plaintiff’s breach of the Oral Contract and/or the Confirmation, the Defendant was constrained to make his living as a HK Driver with less income and less job opportunities than a CB Driver, and he thereby suffered loss and damages. 114.The Defendant agreed that the De-registration process would usually take six months. So even under normal circumstances the Defendant would not have been able to work as a CB Driver up to August 2002. So the Defendant quite properly claimed for loss of wages from September 2002 to March 2006. 115.I find on balance the Defendant tried but was unable to find work between September 2002 and January 2003. He was also unemployed during October 2003 when his then employer 盈行貨櫃運輸公司 ceased business. The Defendant’s actual earnings from February 2003 to September 2003 and from November 2003 to March 2006 as shown in the schedule prepared by the Defendant’s solicitors are well supported by the Defendant’s witness statements as well as his viva voce evidence and discovered documents. I accept the Defendant’s actual loss of wages from September 2002 to March 2006 to be HK$375,671.60 as calculated in the said schedule. XIV. Conclusion 116.The Plaintiff’s claim is therefore dismissed. In respect of the Defendant’s counterclaim, there shall be judgment for the Defendant against the Plaintiff for the sum of HK$375,671.60 and interest thereon at 10.921% pa from the date of the writ of summons to the date of judgment and thereafter at judgment rate until payment. In addition, the Plaintiff is ordered to specifically perform the Oral Contract and/or the Confirmation by arranging the De-registration of the Defendant’s driver registration in relation to the Tractor in Mainland China within two months from the date of this judgment. For the avoidance of doubt, under such order for specific performance the Plaintiff is required not only to arrange the De-registration but to use best endeavours to do so. Such best endeavours would include taking the initiative to liaise and co-operate with the PRC Company to arrange the De-registration, and paying the Tariff and all requisite penalties/charges for the De-registration. 117.There is no reason why costs should not follow event. I grant a costs order nisi that the Plaintiff do pay to the Defendant costs of the action (including costs of the counterclaim and all costs reserved) to be taxed if not agreed.
Representation: Mr Chan Yuk Fai of Messrs B Mak & Co for Tai Wall (China- H.K.) Container Services Company Limited Mr Ng Man Kin of Messrs Kwok, Ng & Chan for Fan Chi Hoi |
Cases cited in this judgment
Further hearings and rulings under DCCJ 5126/2003