Lee Ting Yeung v. Yeung Chung on

DCCJ1939/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1939 OF 2006

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BETWEEN

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Coram: Deputy District Judge Frederick HF Chan in Open Court

Hearing dates: 22^nd and 23^rd September 2008

Date of handing down judgment: 25^th September 2008

JUDGMENT

Trial in absentia

1.On 3^rd July 2008, the present case was put on the Running List of the District Court pursuant to the order of Master Clement Lee and on 19^th September 2008 (Friday), it was lifted there-from for a 2-day trial commencing on 22^th September 2008 (Monday).

2.On the 1^st day of the trial, the Defendant failed to turn up. By virtue of O. 35 r. 1 Rules of the District Court (Cap. 336, Sub. Leg.), the Plaintiff asked the Court to proceed with the trial in the Defendant’s absence and adduced affirmation evidence to satisfy the Court[1] that the Defendant was given sufficient notice of the hearing dates. I allowed the trial to proceed. Mr. Tam Wai Kuen (“Mr. Tam”) and Mr. Lee Ting Yeung (“the Plaintiff”) then testified before me.

The Plaintiff’s case

3.From the un-contested testimonies called by the Plaintiff and on the balance of probabilities, I found that the circumstances of the present dispute were as follows.

4.On 19^th August 2004 at about 10:36 p.m., Mr. Tam was driving an urban Toyota taxi (registration no. KD2768) (“the Taxi”) along Tai Po Road towards Kowloon.

5.At the material time, he (as a taxi-driver on night shifts) hired the Taxi from its owner, the Plaintiff. The Taxi was owned by the Plaintiff since 2001 and fuelled by diesel.

6.Whilst he was travelling in a safe speed of 50 km/hour in the fast lane, he was shocked to see a vehicle (registration no. HM871) (a yellow BMW (“the BMW”) was speeding towards him in the same lane and against the flow of traffic. Mr. Tam immediately took steps to avoid the vehicle by first swerving the Taxi to the left and then to the right to avoid colliding with the BMW.

7.The Taxi crossed into the opposite side of the Tai Po Road towards the direction of Shatin and collided with another vehicle (with registration no. KJ3171) (“Vehicle 3171”). The impact of the head-on collision was so strong that the frontal parts of the Taxi were crushed and smashed. Subsequently, the police investigated the accident and found out that the Defendant was the owner and driver of the BMW.

8.The Defendant was charged under STS1152/2005 with an offence of dangerous driving contrary to section 37(1) of the Road Traffic Ordinance (Cap. 374). At the criminal trial, the Defendant pleaded not guilty and the prosecution called Mr. Tam to testify against him. The Defendant was duly convicted of dangerous driving and sentenced to 240 hours of community services by the learned magistrate, Mr. Thomas Tsang (“the Conviction”).

9.It is the Plaintiff’s case that the collision between the Taxi and the Vehicle 3171 was caused solely by the negligent driving on the part of the Defendant whilst he was in the driving seat of the BMW. The Taxi was examined and it was later found that the costs of repair would exceed the value of it. The Plaintiff made the decision to scrap it. In legal parlance, the Taxi was a constructive total loss.

10.The Plaintiff computed his claims for damages in the statement of claim as follows:

	(a)	Total loss of the Taxi	HK$65,000
	(b)	Loss of use for 49 days @ HK$700 per day	HK$34,300
	(c)	Survey fee	HK$720
	(d)	Handling and storage charges	HK$400
	(e)	Towing fee	HK$400
		Total:	HK$100,420

Loss of use

11.I paused here to observe that the claim for “loss of use” as pleaded by the statement of claim was imprecise and I would respectfully echo what Lord Justice Rix had recently observed in The Baltic Surveyor [2002] 1 Lloyd’s Rep. 623, 643, left column that:

“A Hepplewhite chair, much as it might delight its owner by its uniqueness, irreplaceability or beauty, and however much difficulty the assessment of its value in the case of loss may cause, once that value has been found, is not to be made the subject of a further head of damage for loss of use depending on whether it is more or less used or more or less loved. As the Earl of Halsbury, L.C. said in The Mediana [1900] AC 113 at p. 117:

‘When I say deprived of their vessel, I will not use the phrase “the use of their vessel”. What right has a wrongdoer to consider what use you are going to make of your vessel? More than one case has been put to illustrate this: for example the owner of a horse, or of a chair. Supposing a person took away a chair out of my room and kept it for twelve months, could anyone say you had the right to diminish the damages by showing that I did not usually sit in that chair, or that there were plenty of other chairs in the room?’

It seems to me that applies as much to a claimant who seeks to recover, on top of the full value to him of a lost vessel, and interest, a further head of loss for personal use”. 

12.As evidence and submissions unfolded in the present case, this head of “loss of use” was refined to include the loss of hire fees under 2 agreements of hire.

Liability

13.On liability, the Plaintiff sought to rely on the Conviction as evidence of the Defendant’s negligent driving. Pursuant to the provisions of Order 18 rule 7A of the Rules of the District Court (Cap. 336, sub. Leg.), it was pleaded in the statement of claim dated 20^th April 2006 that the Conviction was relevant to the Plaintiff’s allegations of negligent driving against the Defendant. At trial, the Plaintiff adduced the transcripts and witness statements in relation to the Conviction for the Court’s consideration. To err on the safe side, the Plaintiff’s statement of claim also placed reliance on the legal doctrine of res ipsa loquitor or “the thing speaks for itself”.

14.In this regard, I would refer to Chiu Shung Lam v. Tang Chi Sum Terence & Others, DCCJ2673/2002, unreported, 12^th June 2003. There, the plaintiff alleged that the negligent driving of the five defendants caused damages to his taxi. The plaintiff also relied on the convictions of some of the defendants for careless driving and resort was placed in the pleadings on res ipsa loquitor.

15.Deputy District Judge Marlene Ng (as H. H. Judge M. Ng then was) held that when the factual circumstances were known, any reliance on the doctrine would be misconceived and akin to overegging the pudding. She said at p. 8:

“39.            … It is trite that if the circumstances of the incident are known and evidence in respect of the same is to be adduced, the court must examine all the evidence at the end of the case and decide whether on the facts and inferences the court finds that negligence has been established. The burden remains throughout on the party alleging negligence … to prove that the damage was caused by the negligence of the alleged parties … I draw no assistance from this principle in the present case as the factual matrix of the chain collision was covered in detail by evidence from the parties”.

16.On the relevance and evidential effect of the convictions of the respective defendants for careless driving in relation to the chain collisions, the learned Deputy Judge observed as follows at p. 9:

“Normally, the effect of a conviction of careless driving shifts the burden of proof to the person convicted to show that he was not negligent. In Stupple v. Royal Insurance Co. Ltd. [1971] 1 QB 50, in considering section 11 of the Civil Evidence Act (the equivalent of section 62 of the Evidence Ordinance Cap. 8), Lord Denning at pp. 72-73 said (as approved in Lau Ka Po v. Man Cheuk Ming & Others, HCPI584/1996, Cheung J. (unreported, 10^th March 1997):

“… The Act does not merely shift the evidential burden, as it is called. It shifts the legal burden of proof … Take a running-down case where a plaintiff claims for negligent driving by the defendant. If the defendant has not been convicted, the legal burden is on the plaintiff throughout. But if the defendant has been convicted of careless driving, the legal burden is shifted. It is on the defendant himself. At the end of the day, if the judge is left in doubt the defendant fails because the defendant has not discharged the legal burden which is upon him. The burden is, no doubt, the civil burden. He must show, on the balance of probabilities, the he was not negligent: …

But he must show it nevertheless. Otherwise, he loses by the very force of the conviction …

In my opinion, therefore, the weight to be given to a previous conviction is essentially for the judge at the civil trial. Just as he has to evaluate the oral evidence of a witness, so he should evaluate the probative force of a conviction.

If the defendant should succeed in throwing doubt on the conviction, the plaintiff can rely, in answer, on the conviction itself, and he can supplement it, if he thinks it desirable, by producing (under the hearsay sections) the evidence given by the prosecution witnesses in the criminal trial, or if he wishes, he can call them again. At the end of the civil case, the judge must ask itself whether the defendant has succeeded in overcoming the conviction. If not, the conviction stands and proves the case”.

17.The Defendant’s 2-page defence dated 30^th May 2006 merely put the Plaintiff to strict proof. Indeed, no allegation of contributory negligence was advanced by the Defendant. Given the Conviction, the Defendant’s plea was somewhat audacious. On the basis of the (oral and documentary) evidence, I was satisfied on the balance of probabilities that the Plaintiff’s case on liability was fully made out and I held that the Defendant was 100% liable to the Plaintiff for negligent driving.

Quantum

Value of the Taxi?

18.On the total loss of the Taxi, I am satisfied on the preponderance of probabilities that the reasonable market value of it on the date of the accident was HK$65,000. This figure was vouchsafed by the report dated 31^st August 2004 which was prepared by the Plaintiff’s motor surveyor (Messrs. Sunny Yau Motor Survey Co. Ltd).

19.Plainly, the Plaintiff was entitled to recover this sum of HK$65,000 from the Defendant and I so ordered.

Loss of hire?

20.However, the Plaintiff’s claim for the loss of hire was far from straightforward. The Plaintiff’s pleaded case was one of “loss of use” for 49 days. Mr. Li (counsel of the Plaintiff) in his helpful opening, elaborated by submitting that the 49 days were calculated by determining the period of time which lapsed between the date of accident (i.e. 18^th August 2004) and 8^th October 2004 when the Plaintiff went into the market to secure a purchase of a new taxi and have it registered with the HKSAR Government.

21.It is the Plaintiff’s evidence (which I accept) that prior to the accident, he had entered into two written agreements of hire respectively with Mr. Tam and another taxi driver (Mr. Leung Ming) in respect of the usage of the Taxi. Under the 1^st agreement dated 1^st August 2003, Mr. Tam was given the use of it for the 10 hour night-shift (from 4:00 p.m. to 2:00 a.m.) whereas under the 2^nd agreement dated 1^st January 2004, Mr. Leung could use it for the 10-hour day shift (from 6:00 a.m. to 4:00 p.m.).

22.Under each agreement of hire, the Plaintiff (as the owner of the Taxi) would be entitled to receive HK$350 per day and each day when the Taxi was put on hire, he would receive a total sum of HK$700. The Plaintiff fairly conceded that the diesel fuel charges were paid by the respective drivers but it was he who footed the bills for the general maintenance of the Taxi which, on average, would be about HK$1,000 per month.

23.Mr. Tam also testified that for every 7 days, he would take 1 day off. I am satisfied that the same routine on work and holiday was followed by Mr. Leung, the day-shift taxi driver. In other words, the 2 drivers of the Taxi would have taken 1 day off after working for 6 days on a demanding 10-hour shift. Obviously, when the respective drivers were on holiday, the Plaintiff would receive no hire fees.

24.On quantum, Mr. Li cited 2 unreported cases[2] which dealt with damages where the plaintiffs’ vehicles were damaged and later repaired at some costs. With respect, the present case deals with a completely different case scenario where the Taxi was rendered a constructive total loss by the Defendant’s negligence.

Hong Kong case?

25.Some useful guidance might be obtained from the Hong Kong decision of The Kowloon Motor Bus Co. (1933) Ltd. v. The Attorney General [1984] HKLR 404. There, the plaintiff’s (KMB’s) motor bus collided with an ambulance on the Tsuen Wan Highway. KMB decided to write off the bus and sued the defendant for loss of use. The defendant admitted liability and the assessment of damages was ventilated before Mr. Justice Hunter (as he then was).

26.Mr. Justice Hunter was persuaded by the submissions mounted by KMB’s leading counsel[3] and held that they were entitled to recover general damages on a multiplier and multiplicand approach. It was held that the multiplier was the period of time which the KMB spent on purchasing a replacement Leyland Victory Bus from England whereas the multiplicand was the basic daily costs to run the bus on hire.

27.That case is readily distinguishable from the present one in that advisedly, KMB did not claim for loss of profits given that it had a fleet of buses and a standby bus was deployed and put into operation to replace the destroyed bus.

28.In his judgment, Mr. Justice Hunter did allude to a claim for loss of profits arising from the writing-off of the motor bus when his Lordship relevantly observed at p. 409 that:

“… if one is looking for a loss of profit calculation one starts with the estimated return on fares and deducts from that the daily working costs … But it seems to me that we are not looking for that here, we are not taking half a loss of profit calculation”.

The English cases?

29.Admittedly, therefore, there is a dearth of Hong Kong cases on a claim of loss of profits in respect of a profit-generating chattel which was destroyed by a defendant. I have drawn the attention of the Plaintiff’s counsel to the following English cases and invited him to make submissions in his final address to the Court:

(a)  Owners of Dredger Liesbosch v. Owners of Steamship Edison [1933] AC 449 (“the Liesbosch’s Case”);

(b)  Jones v. Port of London Authority [1954] 1 Lloyd’s Rep. 489 (“the Jones’ Case”);

(c)  The Fortunity [1960] 1 Lloyd’s Rep. 252 (“the Fortunity’s Case”);

(d)  Voaden v. Champion [2001] 1 Lloyd’s Rep. 739 (“the Voaden’s Case”);

(e)  Voaden v. Champion [2002] 1 Lloyd’s Rep. 623 (“the Baltic Surveyor’s Case”).

30.The Liesbosch’s Case was a landmark case and stands for the legal proposition that if the defendant’s tortious acts or omissions caused the total destruction of a profit-earning chattel belonging to the plaintiff, in law, the plaintiff was entitled to recover:

(a)  The market value of the chattel destroyed at the time and place of its destruction;

(b)The profit-earning value of the chattel which but for the defendant’s negligence, the plaintiff would have obtained by putting the chattel into use.

31.The facts were that on 26^th November 1928, the plaintiff’s dredger Liesbosch was moored and unguarded but dragged into the open sea by the defendant’s steamship Edison. It sank and became a total loss. The plaintiff sued for the market value of the Liesbosch and the loss of profits under a charter-party.

32.Regarding the market value of the chattel, Lord Wright (in giving the unanimous judgment of the House of Lords) said:

“It is not questioned that when a vessel is lost by collision due to the sole negligence of the wrongdoing vessel the owners of the former vessel are entitled to what is called restitutio in integrum, which means that they should recover such a sum as will replace them, so far as can be done by compensation in money, in the same position as if the loss had not been inflicted upon them, subject to the rules of law as to remoteness of damage (at p. 459) ...

The respondent’s tortious act involved the physical loss of the dredger; that loss must somehow be reduced to terms of money (at p. 460) …

I agree … that the damages must be assessed as if the appellants had been able to go into the market and buy a dredger to replace the Liesbosch (at p. 461)”.

33.On the more thorny question of how should the compensatory damages reflect the profit-earning capacity of a destroyed chattel, Lord Wright reviewed the old cases and concluded at p. 463:

“In these cases, the dominant rule of law is the principle of restitutio in integrum …

The true rule seems to me that the measure of damages in such cases is the value of the ship to her owner as a going concern at the time and place of the loss. In assessing that value regard must naturally be had to her pending engagements, either profitable or the reverse. The rule, however, obviously requires some care in its application; the figure of damage is to represent the capitalized value of the vessel as a profit-earning machine, not in the abstract but in view of the actual circumstances. The value of prospective freights cannot simply be added to the market value but ought to be taken into account in order to ascertain the total value for purpose of assessing the damage, since if it is merely added to the market value of a free ship, the owner will be getting pro tanto his damages twice over. The vessel cannot be earning in the open market, while fulfilling the pending charter or charters”.

34.In the Jones’ Case, the plaintiff (a haulage contractor in London) sued the defendant for the loss of his motor lorry as a result of a collision between the lorry and the defendant’s steam locomotive. The plaintiff claimed for the value of the lorry and damages for loss of hire. The trial on liability and quantum of damages was conducted before Mr. Justice Devlin (as Lord Devlin then was).

35.In a concise ex tempo judgment where no case was cited nor referred to, Devlin J. found the defendant liable in negligence and proceeded to quantify the damages on the basis of the plaintiff’s 50% contributory negligence, his lordship pithily said at p. 490, right column:

“The sum which would otherwise have been awarded is an agreed sum of £400 for the total loss of the motor lorry and some sum which is disputed for loss of profits. The rate of loss of profit is not disputed. It works out at about £3 10s. a day. £162 was claimed for a total of 39 days, but I am satisfied with Mr. Lewis’s [the defendant’s counsel] point that something further ought to be taken off that for the maintenance of the lorry and both parties are prepared to agree £3 10s a day”.

36.Further guidance may be gathered from the Fortunity’s Case, in October 1958, the plaintiffs’ motor cruiser (Four of Hearts) collided with and was sunk by the defendant’s motor vessel (Fortunity). The plaintiffs were in the trade of letting crafts to hirers for holiday cruises on the Norfolk Broads. They were unable to replace the Four of Hearts until after the next holiday season in 1959. Mr. Justice Hewson faithfully followed the Liesbosch’s Case and posed the relevant question of:

“What was her [the Four of Hearts’] value to them [the Plaintiffs] as a going concern?”[4].

37.At the end of the day, Mr. Justice Hewson allowed the plaintiffs to recover the market value of the Four of Hearts together with the net profit for the 1959 hiring season which the plaintiffs had lost. The net profit for the 1959 hiring season was calculated by deducting the labour, materials and various overhead expenses from the gross earnings which could have been earned by the Four of Hearts had it still been in existence[5].

38.More recently, in the Voaden’s case, the plaintiff was the owner of a vessel Baltic Surveyor. On 18^th October 1996, it was moored at a pontoon at Plymouth. A storm came which caused the defendant’s yacht (Timbuktu) to capsize and dragged the Baltic Surveyor into the sea bed. The plaintiff suffered a total loss of the Baltic Surveyor. The plaintiff sued the defendant for negligence and claimed, among others, for the market value of the Baltic Surveyor, loss of use and loss of chartering income.

39.Mr. Justice Coleman, on the basis of the evidence before him, upheld the plaintiff’s claim for the market value of the Baltic Surveyor but disallowed the claim for loss of use and loss of chartering income on the ground that the plaintiff had failed to adduce evidence to prove that at the date of the accident, there was any ongoing agreement whereby the Baltic Surveyor was hired to a third party. In the Baltic Surveyor’s Case, the English Court of Appeal upheld the judgment of Mr. Justice Coleman on the loss of use and loss of chartered income[6]. 

40.In the present case, there was undisputed evidence that when the Taxi  met its demise on the date of accident, it was not brand-new but with a millage reading of 373,050. As a result of the accident, the Taxi became a total loss and, according to the Plaintiff’s oral testimonies, he had to scrap it at a cost of HK$1,000.

41.The Plaintiff said that he had acted promptly by going into the market to secure another Toyota taxi at a cost of HK$191,450 and had it registered in his name on 8^th October 2004 (i.e. 49 days after the accident) under registration number LR5241. He testified that the 49 days were a reasonable period of time for him to go through the different stages of the application procedures. I accept his evidence in this regard without any reservation. Mr. Li also hammered the point that the Plaintiff had not dragged his feet but acted promptly after knowing from the Surveyor’s Report dated 31^st August 2004 that the estimated costs of repair far exceeded the Taxi’s pre-accident market value.

42.On the basis of the above case law, I believe that the right approach to determine and calculate the net loss of profits vis-à-vis the Taxi  was the one offered by the Jones’ case where Mr. Justice Devlin said at p. 490, right column that:

“I think it does follow as a natural consequence from the accident, and since it is agreed that what has to be allowed is the loss of the lorry as a profit-earning concern, I think the value of the lorry, therefore, is its value plus the profits which it would have earned under existing contracts until such time as it could be reasonably replaced” (my emphasis).

43.In my view, it is clear that apart from the market value of the Taxi, the Plaintiff should be compensated by the Defendant in respect of the net loss of profits under the 2 hiring agreements which the Plaintiff could and would have earned when he acted within a reasonable time to purchase another taxi from the market.

44.In terms of arithmetic, the net loss of hire caused by the Defendant which the Plaintiff should recover was thus:

45.At the end of the Plaintiff’s case, Mr. Li applied for leave to amend paragraph 5(c) of the Statement of Claim to accommodate the claims specified in paragraph 44 of the above. I granted leave to amend to the Plaintiff to clarify the exact basis and quantum of paragraph 5(c) after taking into account the fact that the amendment would not cause any prejudice to the Defendant and the amendments were consequential ones on quantum to reflect what had transpired in the evidence adduced by the Plaintiff.

46.I would hold that the Plaintiff could recover the other heads of damages from the Defendant as they were all well-documented and amounts of which were reasonable:

Conclusion

47.In all, I would order that judgment be entered in the Plaintiff’s favor against the Defendant and the damages were as follows:

48.Further, the Plaintiff was entitled to recover interest on the said sum of HK$95,887 at 8% per annum from the date of the Writ to the date of this judgment and thereafter at judgment rate of the District Court until the date of payment.

49.On costs, I would make an order nisi that the Defendant shall pay to the Plaintiff all the costs of this action on the District Court scale, to be taxed if not agreed. To avoid any doubt, I would also certify this case to be fit and appropriate for the attendance of counsel.

50.Lastly, it remains for me to express my gratitude to Mr. Li for his candid submissions on the interesting issues regarding the quantum of damages.

Representations:

Mr. Felix N. W. Li instructed by Messrs. Kenneth C. C. Man & Co. for the Plaintiff

Defendant (in person) was absent.

[1] At trial, the Plaintiff submitted the 2^nd Affirmation of Ho Ping Kuen (a clerk in the employ of Messrs. Kenneth C. C. Man & Co.) filed on 20^th September 2008 to prove that (a) the Plaintiff’s solicitors had informed the Defendant in writing that the case would be due for trial any time after 16^th September 2008 and (b) on 12^th September 2008, a copy of the hearing bundle was served on him.

[2] Wong Ping Mui v. Mak Hung On, DCCJ.2874/2001, unreported, 12^th August 2001, District Judge Andrew Cheung (as he then was) and Adolf Won Chun Yu v. Lau Wing Wong Weber & Another, DCCJ.4347/2004, unreported, 20^th October 2005, Deputy District Judge Justin Ko. 

[3]Mr. K. Bokhary QC (as Mr. Justice Bokhary PJ was then).

[4]At p. 253, right column.

[5]At p. 257.

[6]See pp. 642-644.

[7]This was the appropriate multiplicand.

[8]This was the appropriate multiplier.