Cases

Carriage by Air and Land | Companies and Corporations | Criminal Law | Damages (Personal Injury or Death) | Road Traffic | Words and Phrases

China Airlines Ltd v Philips Hong Kong Ltd [2002] 3 SLR 367
Court of Appeal — Civil Appeal No 600119 of 2001
Yong Pung How CJ, Chao Hick Tin JA and Tan Lee Meng J
23 April, 25 June 2002

Carriage by air — Limitation of carrier’s liability — Basis of computation — Whether should be the one pallet or sub-packages within — Meaning of ‘package’ — Warsaw Convention as amended by the Hague Protocol art 22(2)(b)

Lok Vi Ming, Ng Hwee Chong and Foong Chi Yuen Joanna (Rodyk & Davidson) for the appellants.
Yap Yin Soon and Kok Tsung-Hao (Allen & Gledhill) for the respondents.

The respondents shipped 1,000 cellular digital spark transceivers as cargo from Singapore to Hong Kong by the appellant carrier, China Airlines Ltd. The transceivers were put in nine cartons, which were, in turn, packed as a single package or pallet weighing 154kg.

A single air waybill was made out by the respondents which stated the ‘No of Pieces RCP’ as ‘1’. Upon arrival in Hong Kong, four cartons containing 440 transceivers, weighing 60kg, were discovered missing. The total value of the missing transceivers was US$74,360.

The respondents’ claim was subject to art 22(2) of the Warsaw Convention, as amended by the Hague Protocol, which limited the liability of the carrier to a sum of 250 francs per kilogramme of ‘the total weight of the package or packages concerned’. The appellant carrier argued that the cartons within the pallet should be the appropriate ‘packages’ upon which the limit of liability would be calculated, yielding a figure of $2,974.80. The respondents contended that the correct basis was the ‘pallet’ and not the sub-package (ie the cartons), and that the compensation would accordingly be capped at $7,635.32. The judge in the court below ruled in favour of the respondents.

Held, dismissing the appeal:

Although a parallel was sought to be drawn between the Warsaw Convention and the approach taken by the courts in carriage of goods by sea governed by the Hague Rules and the Hague-Visby Rules, the regimes have differentiating features, and it is unnecessary to rely on the construction given by the courts under the Hague and/or Hague-Visby Rules.

Taking a purposive interpretation of the Convention does not necessarily lead to the result contended by the appellants. While the Convention seeks to protect the carrier by setting limits as to its liability, that does not mean that any conceivable manner of construction which would reduce the limit of the carrier’s liability should be adopted. The word ‘package’ has no real technical meaning and there is nothing in art 22(2)(b) to indicate that ‘size’ is a factor in relation to a package. The construction which a court gives to the word ‘package’ must be reasonable and fair, and it must also promote certainty.

The problems involving several shipments assembled in a container by a freight forwarder and covered by just one air waybill did not arise here and there was no need to deal with the difficulties that consolidated freight, carried in a container, might pose.

According to art 11(2), the statement as to the number of packages on an air waybill is only prima facie evidence of the same. Obviously, if there is a clear error as to the number of packages written on the waybill, the carrier must be allowed to adduce evidence to show what was the true number of packages which were consigned to the carrier. But it is altogether another matter to say there is an error in the description of a package in the waybill just because the goods in that package were packed in nine smaller packages. This approach would give rise to uncertainty and/or unnecessary controversies.

The approach taken by the court below reasonably promotes certainty and is also in line with the object of the amended Convention. Article 22(2)(b) refers to a package or packages and not to sub-package. We should not be concerned with sub-packaging which does not appear to the eye and never formed the basis for the contract of carriage. Moreover, under art 7, the carrier has the right to require the consignor to make out separate air waybills when there is more than one package. There is also no doubt that a carrier has the right to set the weight limit for each package if it were concerned about the question of limit of liability. In this way the carrier could set the maximum extent of its liability for loss or damage of a package.

Whether it is a literal interpretation or the purposive interpretation which should apply to art 22(2)(b), the answer remains the same: the computation of the limit of liability should be based on the package as a whole. No unjust benefit arises to the consignor as a result since the consignor can never recover more than his actual loss.

Re Dayang Construction and Engineering Pte Ltd [2002] 3 SLR 379

High Court — Companies Winding Up No 600086 of 2002
Belinda Ang JC
12, 30 April, 14, 28 May, 8 June 2002

Winding up — Company unable to pay debts — Statutory demand under s 254(2)(a) of Companies Act (Cap 50, 1994 Ed) — Whether demand letter defective for not giving company three weeks to pay and not warning it of consequences of failure to comply — Company being owed substantial sums by trade debtors — Several creditors opposing winding up — Whether company insolvent and unable to pay its debts — Whether order for winding up should be maintained — Companies Act (Cap 50, 1994 Ed) s 254(1)(e) & (2)(a)

Winding up — Statutory demand — Validity — Demand letter not giving company three weeks to pay and not warning it of consequences of failure to comply — Whether demand letter defective — Whether demand letter complied with statutory requirements — Companies Act (Cap 50, 1994 Ed) s 254(2)(a)

Tan Chee Meng and Florence Chew (Ruth Chia & Co) for the petitioning creditors.
Zaheer K Merchant and Sadique Marican (Madhavan Partnership) for Dayang Construction and Engineering Pte Ltd.
Tito Isaac (Tito Isaac & Co) for the opposing creditors.
Rajendran Kumaresan (WT Woon & Co) for the supporting creditors.
Karen Loh for the Official Receiver.

A judgment creditor petitioned on 11 March 2002 for Dayang Construction and Engineering Pte Ltd (‘Dayang’) to be wound up under s 254(1)(e) of the Companies Act (Cap 50, 1994 Ed) (‘the Act’) on the ground that Dayang is unable to pay its debts. The petitioner relied on the provisions of s 254(2)(a) of the Act as proof of insolvency. The petitioner stated in the amended petition that judgment in the sum of $200,090.30 together with pre-judgment interest and costs of $1,216.99 and $1,800 respectively were entered on 29 November 2001 against Dayang. On 5 December 2001, the solicitors for the petitioner served on Dayang a letter demanding payment of the judgment sum, interest and costs. At the adjourned hearing of the amended petition on 12 April 2002, counsel for Dayang sought an adjournment of four weeks as the company wished to apply for judicial management. Goh Eng Soo (‘Goh’), a director of Dayang, filed an affidavit to oppose the winding up, stating that legal proceedings against Dayang’s two trade debtors, namely, Tong Hup Seng Construction Co Pte Ltd (‘Tong Hup Seng’) and Guobena Sdn Bhd (‘Guobena’) were intended, that the company needed time to file for judicial mangement or apply for a scheme of arrangement and that several creditors supported the adjournment. The petitioner and other creditors who supported the winding up opposed the adjournment.

After hearing arguments and on the evidence, the application for an adjournment was refused and an order was made for Dayang to be wound up. On 18 April 2002, counsel for Dayang requested further arguments. The judge permitted the company and those creditors opposing the amended petition another opportunity to be heard. At the hearing, counsel for Dayang contended that the 5 December letter was not a statutory demand within s 254(2)(a) of the Act, as it was defective in two respects: firstly, it did not refer to a period of three weeks for payment but had demanded repayment within five days; secondly, it contained no warning that the company would be wound up if the company did not meet the demand. Consequently, the amended petition must fail.

Held, maintaining the winding-up order:

Having regard to the scheme, structure and language of s 254(2)(a), there was clearly no merit whatsoever in either of the alleged defects raised by counsel for Dayang. The letter of 5 December 2001 was an effective demand for the purposes of s 254(2)(a).

The three-week period is not a statutory requirement of the notice of demand itself. It is relevant only in the context of a company failing or neglecting to pay a debt within that period. It is also not a legal imposition of s 254(2)(a), express or implied, that the creditor must indicate on the face of the demand the implications to the company and the detriment it may suffer if it fails to comply, or the other two alternatives available to it, namely, securing or compounding. Ultimately, it is for the court to decide whether a company should be wound up in the exercise of its discretion. The form in which a statutory demand is expressed ought to be approached with the general discretion of the court in mind and in this case, it was not suggested that Dayang was in fact misled by the demand; Re Simpson Development Investment (HK) Co [1999] 1 HKLRD 202 and Helicarr Consolidated v Royal Insurance Fire & General (NZ) [1993] 2 NZLR 46 followed.

It was clear from the amended petition that the petitioner had an undisputed judgment debt, it was due and Dayang had neglected to pay it. The court was entitled to accept that as prima facie proof, and inference could be drawn, that the company was unable to pay its debts within the meaning of s 254(1)(e); Cornhill Insurance plc v Improvement Services [1986] BCLC 26; [1986] 1 WLR 114 and Taylors Industrial Flooring v M & H Plant Hire (Manchester) [1990] BCLC 216 followed.

The company was commercially insolvent. It had no available cash to settle the judgment debt. There were no on-going projects in hand and no future contracts in the pipeline. There was no reason to keep the company alive just to pursue a claim against the two trade debtors when that could be left to liquidators who had consented to act in the winding up of the company. In the hands of those liquidators, any possible potential conflict of interest would be avoided, given that Goh’s brother and father are directors of Tong Hup Seng.

The initiatives to stop the winding up for the reasons given were viewed with some reservations. Dayang had made loans to its directors and directors’ fees were due from the company. With liquidators in place, the directors would face the possibility of having to repay these loans and stand in the queue like the rest of the unsecured creditors to recover any sum due to them from the company as directors.

The proposed scheme of arrangement exhibited in Goh’s second affidavit was skimpy and unconvincing. It glaringly omitted to take into account the substantial borrowings of the directors and solely focused on the trade debts of Tong Hup Seng and Guobena. Creditors were left to wonder when the proposal would take effect and the length of time they would have to wait for payment. The proposal was also dependent on the company succeeding in any litigation against Tong Hup Seng and Guobena.

None of the creditors who opposed the grant of a winding-up order filed affidavits stating reasons for their opposition. From what was said in court or seen in letters exhibited by Dayang, they were all mere expressions of willingness to give the company time to recover money from Tong Hup Seng and Guobena. That alone was not good enough a reason for opposing the winding up, even if it represented the wishes of the majority.

Accordingly, the order made on 12 April 2002 to wind up Dayang was to stand.

Tan Cheng Kwee v Public Prosecutor [2002] 3 SLR 390

High Court — Magistrate’s Appeal No 332 of 2001
Yong Pung How CJ
30 April, 30 May 2002

Strict liability — Statutory provision creating an offence — Relevance of severity of penal sanction in determining whether provision created strict liability offence

Road traffic offence — Causing heavy motor vehicle above four metres high to be driven without requisite licence — Whether offence of ‘causing’ unlawful user one of strict liability — Penalty on conviction — Road Traffic Act (Cap 276, 1997 Ed) s 79(1)

See ROAD TRAFFIC.

Karuppiah Nirmala v Singapore Bus Services Ltd [2002] 3 SLR 415

High Court — Suit No 69 of 2000 (Registrar’s Appeal No 258 of 2001)
Judith Prakash J
9 January, 8 February, 2 May 2002

Future costs — Future medical expenses — Surgery, hospitalisation and treatment

Loss of earnings — Pre-trial loss of earnings — Whether injuries sustained had effect on plaintiff’s employment — Duty to mitigate loss — Appropriate multiplier

Loss of future earnings — Injuries led to plaintiff having to quit her full-time job — Restriction on ability to work long hours on continuous basis — Earning ability adversely affected — Main skills as professional unaffected — Whether award for loss of earning capacity more appropriate

Loss of earning capacity — Whether award for loss of earning capacity more appropriate than one for loss of future earnings — Injuries led to plaintiff having to quit her full-time job — Restriction on ability to work long hours on continuous basis — Earning ability adversely affected — Main skills as professional unaffected

Karuppan Chettiar and Renuka Chettiar (Karuppan Chettiar & Partners) for the plaintiff/respondent.
Benedict Chan and Martin Lee (Goh Poh & Partners) for the defendants/appellants.

The plaintiff was hit by a bus driven by an employee of the defendant bus company on 14 July 1998. She obtained an interlocutory judgment against the defendants in July 2000 for damages to be assessed. After the assessment of damages by the assistant registrar, the defendants appealed against the awards only in respect of future medical expenses, pre-trial loss of earnings and loss of future earnings.

The award for future medical expenses of $14,000 was supposed to cover surgery of the plaintiff’s shoulder and treatment for her neck. Medical experts were called by both the plaintiff and the defendants to give their opinions on the medical condition of the plaintiff, the need for surgery and the costs of surgery needed and of hospitalisation.

As for the pre-trial loss of earnings, the assistant registrar awarded $1,500 per month for 33 months from the period between April 1999 to October 2001. At the time of the accident, the plaintiff was holding down two jobs. She was working as a part-time lecturer with Kinderland Learning Centre and as an editor with Federal Publications. She had to resign from her job with Federal Publications because her job involved extensive typing, editing, proofreading of manuscripts and working on a computer and she was unable to meet deadlines due to pain in her neck and shoulder. However, she carried on with her work as a part-time lecturer and took on an additional role as a practicum supervisor. Even in these occupations, she would develop pain in her shoulders and neck. As an editor with Federal Publications, she was earning $4,300 a month and after the accident, her average monthly earnings for the years ending 1999 and 2000 were $2,500 and $2,460 respectively. The defendants argued that notwithstanding her injuries, she was not operating at optimum capacity. The evidence tendered by the plaintiff showed that she worked only ten days a month and each session was three hours long. They further argued that her real reason for leaving Federal Publications was not because of her medical condition. Her letter of resignation had not mentioned her medical condition, instead it stated that she was leaving in order to spend more time with her children.

With respect to post-trial loss of earnings, the issue was whether the plaintiff should have been awarded future loss of earnings or whether the correct award would have been one for loss of earning capacity. The plaintiff argued that she was entitled to future loss of earnings because she could no longer work as a full-time editor due to her medical condition. The defendants submitted that the editorial work only took up a period of one and a half years out of a total career period of 15 years and since the accident, she had gone back to what she had been doing before her stint in editing. It was argued that the plaintiff was not disabled from pursuing her vocation in which she had adequate training and plenty of experience and in fact, was now carrying on. It was further argued that that work would pay comparably to her editor’s work once she was able to take on additional assignments.

Held, allowing the appeal:

The evidence did not support any award for future surgery on the plaintiff’s cervical spine. The evidence of her expert was that he could not predict whether this would be required. It was a possibility. Possibilities are not, however, probabilities and the court works on the balance of probabilities. The evidence did, however, support an award for the cost of a shoulder operation since this had been recommended by both doctors as the plaintiff continued to experience symptoms in her right shoulder. The present cost of a shoulder operation would be in the vicinity of $8,000 if the plaintiff went to an A class ward in Singapore General Hospital. There was no evidence as to the cost of other medical treatment such as physiotherapy and traction and drugs, as such it was not considered that the award could take those costs into account. The award for future medical expenses was hence varied from $14,000 to $8,000.

It appeared that the injuries which the plaintiff sustained did have an effect on her employment. Her complaints at work were consistent with those injuries. The plaintiff’s explanation that she was trying to preserve the prospects of future employment by not disclosing her real reason for leaving Federal Publications was an acceptable one. Nevertheless, she had been advised by her doctor in March 2001 to undergo an operation to deal with her shoulder pain. The defence pointed out that the plaintiff had a duty to mitigate her losses. Accordingly, the award for pre-trial loss of earnings was $1,500 per month for 27 months, reduced from 33 months, for the period from April 1999 to March 2001.

Although the accident had meant that an editing career would be difficult for the plaintiff to maintain, it had not affected her main skills or her ability to exploit those skills profitably. Whilst her earning ability had been adversely affected by the accident the circumstances of the case made an award for loss of earning capacity more appropriate than one for the loss of future earnings. The editing path was one that was new to the plaintiff and it was not possible to be certain that she would have continued in that line. There were other remunerative avenues still open to her. However, bearing in mind the fact that her ability to earn a good income might be limited from time to time by the after effects of the accident, an award of $70,000 for the loss of earning capacity would be reasonable. The basis of this award was the sum of $500 a month for 11 years rounded upwards to reflect a fair estimation of the impact the accident had had on the plaintiff’s earning capacity.

Tan Cheng Kwee v Public Prosecutor [2002] 3 SLR 390

High Court — Magistrate’s Appeal No 332 of 2001
Yong Pung How CJ
30 April, 30 May 2002

Causing heavy motor vehicle above four metres high to be driven without requisite licence — Whether offence of ‘causing’ unlawful user one of strict liability — Road Traffic Act (Cap 276, 1997 Ed) s 79(1)

Sentencing — Disqualification order — Whether mandatory sentence of disqualification from holding or obtaining all classes of driving licences applicable to charge of ‘causing’ unlawful user — Road Traffic Act (Cap 276, 1997 Ed) s 79(4)

Michael Khoo SC and Dominic Nagulendran (Michael Khoo & Partners) for the appellant.
Bala Reddy and Francis Ng (Deputy Public Prosecutors) for the respondent.

The appellant, Tan Cheng Kwee (‘Tan’), was the director of a transport company and was the sole person in charge of its operations. On 13 May 2000, Tan instructed his driver, Selamat, to use the company’s prime mover to transport a container from a warehouse to the PSA Container Terminal. During the journey, the top of the container hit a height restriction gantry, got lodged for a short time beneath a railway bridge that spanned Hillview Road, and then struck another height restriction gantry. The police arrived and found that Tan’s company did not possess a licence issued by the Deputy Commissioner of Police to drive a vehicle whose total height exceeded four metres. The overall height of the prime mover with trailer and container, was 4.465m. Tan was thus charged under s 79(1) of the Road Traffic Act (Cap 276,1997 Ed) (‘the Act’). The district court found him guilty of the offence and sentenced him to 14 months’ imprisonment. Tan was also disqualified from holding or obtaining all classes of driving licences for a period of one year with effect from his date of release from prison. Tan appealed against conviction and sentence.

Held, dismissing the appeal against conviction and sentence, but imposing a fine of $1,000 and revoking the disqualification order:

Section 79(1) of the Act created a strict liability offence. It clearly fell within the class of statutory offences that dealt with public safety. Furthermore, adopting a strict liability approach would rigorously promote the intention of Parliament by ensuring that owners and drivers of heavy motor vehicles which were above a certain height were in possession of and, more importantly, cognisant of the conditions imposed in the licences that were required, so that their vehicles would not pose a potential hazard to overhanging public structures and endanger the lives of those using them.

The severity of the penal sanction imposed by a statute was but one of the many factors to be taken into account when determining whether Parliament had intended to create a strict liability offence. Parliament has the power to impose severe penalties for strict liability offences in order to achieve its legislative purpose. Records of Parliamentary debate indicated that the legislature had deterrence on its mind when it drafted the predecessor of s 79(1); Gammon v A-G of Hong Kong [1985] AC 1; [1984] 3 WLR 437 followed.

Strict liability should only be imposed if it was a matter of necessary implication. As for s 79(1), imputing the requirement of mens rea for every single element of the offence would severely stultify the legislative purpose, since owners and drivers of tall, heavy motor vehicles risked causing serious public harm if they did not positively take care. Therefore, it did not make sense that a conviction should hinge on proof of positive knowledge or intention.

When a strict liability offence involved causing an act that was in itself unlawful, all the prosecution needed to establish was the causal link, or actus reus. This involved showing that the accused had some form of control, direction and mandate over the person doing the unlawful act proper which the accused had exercised; followed. Once this was proved, it would then be incumbent on the defence to prove on a balance of probabilities that it had taken all reasonable care; Shave v Rosner [1954] 2 QB 113; [1954] 2 All ER 280, Mcleod v Buchanan [1940] 2 All ER 179, R v City of Sault Ste Marie (1978) 85 DLR (3d) 161 and MV Balakrishnan v PP [1998] 1 CLAS 357 followed.

Given Parliament’s intention to cast the burden of taking care on both drivers and owners of heavy motor vehicles, there was no rational basis for requiring proof of mens rea of knowledge of unlawful user in respect of the ‘causing’ type offence, while not requiring proof of mens rea with respect to the strict liability offence of unlawful user.

None of the reasons put forward came close to showing that Tan had exercised reasonable care. He was effectively the managing director of a company whose primary business was the provision of transport services for containerised cargo. He had some 25 years’ experience in the industry. It was Tan’s evidence that containers came in standard sizes and he had applied for height permits from PSA in the past. As a matter of fact, Tan claimed to be rather ignorant of the laws governing vehicular height limits.

When deciding on a suitable penalty to be imposed, the court should not take into account the fact that an accused person had chosen to claim trial instead of pleading guilty. However, taking into account the culpability of Tan’s conduct, it could not be said that the sentence of 14 months’ imprisonment was manifestly excessive.

Section 79(4) of the Act revealed that the mandatory sentence of disqualification from holding or obtaining all classes of driving licences did not apply to a charge of ‘causing’ unlawful user. As the court below had assumed that this was mandatory, the order would be set aside. A general power to order disqualification exists under s 42 of the Act but this is a discretionary power.

As the court below had omitted to impose a fine made mandatory under s 79(1)(a) of the Act, a fine of $1,000 would be imposed.

China Airlines Ltd v Philips Hong Kong Ltd [2002] 3 SLR 367

Court of Appeal — Civil Appeal No 600119 of 2001
Yong Pung How CJ, Chao Hick Tin JA and Tan Lee Meng J
23 April, 25 June 2002

‘Package’ — Warsaw Convention as amended by the Hague Protocol art 22(2)(b)

See CARRIAGE BY AIR AND LAND.