HANG SENG BANK LTD AND ANOTHER v. CATHAY PACIFIC AIRWAYS LTD AND ANOTHERS

bjbj `5rp HCCL000037/1990 CL 37 of 1990 IN THE HIGH COURT OF HONG KONG COURT OF FIRST INSTANCE COMMERCIAL LIST ----------------- BETWEEN HANG SENG BANK LIMITED 1st Plaintiff BANK OF NEW ZEALAND 2nd Plaintiff CATHAY PACIFIC AIRWAYS LIMITED 1st Defendant AIR NEW ZEALAND LIMITED 2nd Defendant ----------------- Coram: The Hon. Mr. Justice Waung in Court Dates of Hearing: 16th-20th, 23rd-27th June, 3rd-4th July 1997 Date of Handing Down of Judgment: 15th August 1997 ----------------- JUDGMENT ----------------- On the 27th April 1988, a valuable consignment of Cargo consisting of 300,000 New Zealand Dollars Bank Notes ("Money Consignment") was carried in the Diplomatic Locker of the Service Container on the aircraft of Air New Zealand ("ANZ") from Hong Kong to Auckland. The Flight TE107 ("the Flight") carrying this Money Consignment left Hong Kong Airport on 26th April and arrived at Auckland Airport in New Zealand about noon or just shortly thereafter on the 27th April. There was no one from ANZ to meet the Money Consignment and sometime after 6.30 p.m. on 27th April 1988, it was discovered by ANZ that the Money Consignment had been stolen from the Diplomatic Locker of the Service Container. The Plaintiffs who are owners of the Money Consignment thereafter sued by this Action the 1st Defendant, Cathay Pacific Airways ("Cathay") as the carrier which received that Money Consignment from the Plaintiffs and the 2nd Defendant, ANZ as the actual carrier which carried that Money Consignment to Auckland and which had the responsibility of taking case of it. The Flight was a joint weekly service between Hong Kong and Auckland operated by Cathay and ANZ, pursuant to a contract dated 5th September 1986 ("JV Contract") between Cathay and ANZ. Cathay operated with Cathay aircrafts the first year of the joint service and ANZ operated the second year of the joint service with ANZ aircrafts. The Flight was during the year when ANZ was operating the service. A telex informing ANZ that there was valuable cargo on board the Flight was sent by Cathay to ANZ on the 26th April and it was received at the Cargo Department of ANZ. But this telex was not considered by ANZ Cargo Department to be a valuable cargo telex which ANZ normally received when valuable cargo was sent to Auckland and therefore neither the Duty Cargo Supervisor nor Security of ANZ at Auckland was informed and no step was taken to meet the Money Consignment upon the arrival of the Flight at Auckland. The Service Container, in which the Diplomatic Locker was located (locked inside which Diplomatic Locker was the Money Consignment) was off-loaded from the aircraft at the Auckland airport and wheeled off to the Baggage Disassembly Area where the baggage of the Crew and First Class Passengers were off loaded but apparently the Diplomatic Locker was not opened at the Baggage Disassembly Area and the Service Container was wheeled back to the Ramp Area and then left standing near aircraft. There the Service Container stood in the open from about 1 p.m. to 6.30 p.m. At about 6.30 p.m. the storeroom of the ANZ which checked the safe arrival of all cargo on the plane noticed that the Money Consignment listed in the Cargo Manifest was not accounted for. Two afternoon shift clerks from the Cargo Department, Ward and Billing were then sent to the Service Container to look for the Money Consignment in the Diplomatic Locker, but the Money Consignment was not in the Diplomatic Locker. Thereafter attempts were made to find the Money Diplomatic but without success. Eventually, some 6 days afterwards, on the 3rd of May 1988, a report was made to the Auckland Police which looked into the disappearance of the Money Consignment and concluded after a long investigation that the Money Consignment had been stolen by persons unknown. The claim by the Plaintiffs for the full value of NZ$300,000 is resisted by Cathay and ANZ and the Trial is mainly over whether the Plaintiffs could recover in full against Cathay and ANZ or only the US$100 limit set by the Warsaw Convention, the liability for which both Defendants admitted. At the trial before me, two witnesses for Cathay and 5 witnesses for ANZ gave evidence. At the conclusion of the Trial, there were a number of issues which required to be determined and they can be summarised below as follows:- 1. Was the Money Consignment loaded on board the aircraft in Hong Kong ("Money On Board Issue") Was the Money Consignment lost as result of recklessness by servant of Cathay in the sending of a telex which was not considered by ANZ as a valuable cargo telex and if there was recklessness was that recklessness of the servant of Cathay with knowledge that damage would probably result ("Reckless Cathay Telex Issue"); Was the Money Consignment lost as result of it being stolen by one of the following employees of ANZ ("Theft by ANZ Cargo/Ramp Issue"); Palmer (morning shift cargo clerk) Garden (morning shift cargo clerk) Thomsett (morning shift cargo supervisor) Clinton Brown (morning shift Ramp Coordinator) Samuels (afternoon shift cargo Supervisor) Ward (afternoon shift cargo clerk) Billing (afternoon shift cargo clerk) Henderson (afternoon shift Ramp Coordinator) and if not was it stolen by other employees of ANZ done in the course of employment; Was the Money Consignment lost as result of:- (Reckless ANZ Cargo/Ramp Issue") recklessness of following servants of ANZ:- Palmer Garden Thomsett Clinton Brown Samuels Ward Billing Henderson and if so, was such recklessness done with knowledge that damage will probably be suffered and if so, was such recklessness done in the course of the employment of such servant; If Cathay was liable to the Plaintiffs, should ANZ indemnify Cathay ("Indemnity Issue") on basis of intentional stealing by ANZ servants on basis of recklessness by ANZ servants with knowledge on basis of recklessness by Cathay servants with knowledge on the basis of apportionment by the Court. Of the five Issues, 3 Issues took up most of the time and received most of the attention, namely Issue 2 relating to breaking the Warsaw Convention limit against Cathay (the Reckless Cathay Telex Issue) and Issues 3 and 4 relating to breaking the limit against ANZ (Theft by ANZ Cargo/Ramp Issue and Reckless ANZ Cargo/Ramp Issue). But before I consider each Issue, it is convenient briefly to consider the relevant provision relating to the carriage of cargo by air and its effect. BREAKING WARSAW CONVENTION LIMIT By the Carriage by Air (Overseas Territories) Order 1967, the Warsaw Convention was made applicable to Hong Kong. Article 22 provides for the liability of the air carrier but limits it to an amount calculated by reference to weight which is agreed in this case by the parties as being just above US$100. Article 25 which is the key provision said:- "The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intention to cause damage or recklessly and with knowledge that damage would probably result, provided that, in the case of such act or omission of servant or agent, it is also proved that he was acting within the scope of his employment." It is to be seen that the Warsaw Convention limit would be broken if it could be proved that:- (1) Damage resulted from:- an act or omission of the carrier done with intention to cause damage; or an act or omission of the carrier done recklessly; and (ii) such reckless act or omission of the carrier was done with knowledge that damage would probably result; (2) Damage resulted from:- an act or omission of the servant of the carrier done with intention to cause damage; and (ii) such intentional act or omission of the servant of the carrier was done in the course of the employment of such servant; an act or omission of the servant of the carrier done recklessly; and (ii) such reckless act or omission of servant of the carrier was done with knowledge that damage would probably result; and (iii) such reckless act or omission of the servant of the carrier was done in the course of employment of such servant. The very low limit set by the Warsaw Convention is notoriously difficult to break as can be seen from the stringent requirements laid down in the Warsaw Convention which I had described earlier. It can only be broken if it is proved against the carrier that the damage resulted either by reason of the act of the omission of the carrier or of the servant of the carrier. The act or omission had to be either intentional to cause damage or done recklessly with knowledge that damage would probably result. In the case of the act of the servant, there is also an additional requirement that such act or omission was done within the scope or what is generally said under English law to be in the course of the employment of that servant. The case law (see Goldman v Thai Airways International Ltd. [1983] 1 WLR 1186; SS Pharmaceutical Co. Ltd. v Quantas Airways Ltd. [1991] 1 Lloyds Rep. 288 and Gurtner v Beaton [1993] 2 Lloyds Rep. 370) shows that the Courts (with some not convincing exceptions) have consistently interpreted the requirement of knowledge that damage would probably result as a subjective test so that it had to be shown (and Mr. Smith does not seriously contend otherwise) that:- (1) not only was the act of the servant reckless; but also that the reckless act of the servant was done in the course of the employment; and further that the reckless act of the servant was done with subjective actual knowledge (not imputed knowledge) of the servant that damage would probably result from his reckless act. It is these triple high requirements of Article 25 ("Triple Requirements") which made it so very very difficult in case after case for cargo claimants to successfully break the limit. I set out here these Triple Requirements because as it would be seen later, the establishment of the case of the Plaintiffs against the Cathay servants and the ANZ servants for recklessness depends on meeting these Triple Requirements WAS MONEY ON BOARD The Plaintiffs said that the Money Consignment was loaded on board the ANZ aircraft and that the aircraft left Hong Kong with that Money Consignment on board, locked inside the Diplomatic Locker of the Service Container. Mr. Barma with his usual good judgment agreed that the Money Consignment was on board but ANZ took issue with this fairly reasonable case of the Plaintiffs. Mr. Ma contended, no doubt on instructions, that the Money Consignment was not on board the aircraft. I accept the evidence given by Jeffrey Lau and Ben Cheng for Cathay and with the inference to be drawn from such evidence and from the documents submitted to the Court. I find as a fact that the Money Consignment was loaded on board the aircraft when it took off for Auckland. RECKLESS CATHAY TELEX The telex dated 26th April 1988 ("the Telex") advising of the valuable cargo being transported to Auckland, was sent by Ben Cheng of Cathay to ANZ and it was in the following terms:- "261455 OTB 003 26APR88 @NNNN AKLFFTE AKLKKCX AKLFSTE CPYXXXX HKGFFCX HKGKRCX TE/261502EC TE107/DTE AA OB A VI CGO LV FISH 14/154K LDDIN H5 STP BB OB DIP 2 PCS N VAL CGO 1 PC LDDIN SEC LKR IN GOOD COND STP CC OB OCS 2 PCS N SEC ITEM 1 PC LDDIN H5 STP" The Telex was addressed to the Cargo Department of ANZ in Auckland (AKLFETE), to the Cathay's office at Auckland (AKLKKCX) and to the Sales Department of ANZ in Auckland (AKLFSTE) and to two other Hong Kong Cathay offices. It was not addressed to the Security Department of ANZ at Auckland or to the Ramp Office of ANZ at Auckland or to the Duty Supervisor of the Cargo Department of ANZ in Auckland. As can be seen from the Telex, it referred to 3 different items of business. The first item under line AA was in respect of Live Fish on board loaded at Hold 5 of the aircraft. The second item under line BB was in respect of two separate matters namely, firstly 2 diplomatic bags on board and secondly valuable cargo on board both loaded in security locker. The third item under line CC was in respect of On Company Service 2 pieces and security item 1 piece both loaded again at Hold 5 of the aircraft. It is of course the second part of line BB relating to valuable cargo which is supposed to be the pre-arrival telex advising of valuable cargo which is relevant and the case of the Plaintiffs simply put is that the sending by Cathay of the Telex advising of the arrival of the Money Consignment was so inadequate as amounting to recklessness by a servant of Cathay who did this with knowledge that damage would probably result from his reckless act. It is to be observed that of the Triple Requirements applying to a case based on recklessness of servant, the parties are at issue on Requirement (1) and (3), no issue being taken on Requirement (2) that Ben Cheng was acting in the course of employment when he sent out the Telex. The questions are firstly was the act of Ben Cheng in sending that Telex reckless and secondly did Ben actually know that it would probably result in loss. The case of the Cathay was very simple and in the circumstances attractively stated by Cathay in the form of the evidence from the loading officer who sent the Telex. Ben Cheng. His evidence could be summarised as follows. He was trained to send these valuable cargo telexes by being shown by his seniors the format of and what to put in the telexes. He was told what addresses to put in the Telex by reference to what will be later called the Folder Addresses Table which was available at the Telex Room of Cathay and this is what he did and what others at Cathay did and he and others at Cathay had sent these telexes many times to many destinations for outgoing valuable cargo and no one including his supervisors had ever complained that it was not the right way of sending telex advice of valuable cargo. He had never seen either the Cathay Manual or the ANZ Manual nor was he ever told that he had to send a Valuable Cargo Telex in the form now suggested by ANZ. It never occurred to Ben Cheng that by sending the Telex which he did, damage or loss of the valuable cargo would probably result. Ben Cheng was a good witness and I accept him as a truthful witness and therefore I accept his evidence. In reference to the first question of whether his act of sending the Telex was reckless. I take the view that it was not. It is true that the Telex strictly did not conform to some parts of the Manual of Cathay. At Section 16, paragraph 5 of the Cathay Manual (page 166 of the Bundle) said:- "COMMUNICATIONS Restrict the use of signals to the absolute minimum. Teleprinters are not secure instruments. Restrict communications to a "need to know" basis to persons who require the information to carry out their duties or fulfil their responsibilities. Show the values of items in signals only when specially needed by the recipient. Avoid specific use of the actual commodity in signals. Use codes where applicable, i.e. metal - VI, CAR. Major organisations involved in the shipping of Valuable Cargo preadvise the consignee privately of the arrival details. However, on acceptance find out if the consignee is meeting the propose flight, if not, despatch a signal to destination station giving Flt. No. VAI, ALERT. Consignee XYZ, and Telephone No. Destination station is to advise the consignee to make immediate collection arrangements. No values or commodities are to be indicated in his signal, which is only to be despatched if the consignee is unaware of transportation details. See 5.a." At Section 16, paragraph 14 of the Cathay Manual (page 169 of the Bundle) said:- "VALUABLES IN CONTAINERS (contd.) VAL, telex advice (refer to Section 16 paragraph 5) must also include the ULD number and the security seal numbers. e.g. OB CX/FLT NBR/DTE VAL AWB 160/01234567 '30/300K HKG/NRT IN AVA 1234 CX POS HL SEALS NBRS XXXXX/XXXXX/XXXXX/XXXXX FLS SAFEGUARD ONARR Note: The above telex advice is not required for operation between CUBIC mechanised sites. However, the seal numbers must be noted in the DCI "remarks" field." At Section Y1, page 1 under Communications - Port Message Addresses of the Cathay Manual (page 170-A of the Bundle) the following is said:- "Outbound signals for each flight should be consolidated, where possible, to reduce the number of telex transactions at both ends, although this should not be at the expense of prompt advice." And then under the table of that page it shows in respect of AKL the port message address for HUM/PER/AVI ONBOARD as being AKLFFTE and AKLFSTE and for VAL/VUN ON BOARD as being AKLFFTE. For the sake of convenience I will refer to this page of the Manual as being "the Folder Addresses Table". It could be said that strictly Ben Cheng did not follow paragraph 5b of Section 16 of the Manual or paragraph 14c of Section 16 of the Manual. But I would not characterise such non conformity as being reckless because firstly Ben did not know about these paragraphs since he was never shown the whole Manual or those particular paragraphs but more significantly, the contemporaneous telexes exchanged after the loss, suggest that no one on the part of Cathay or even ANZ thought that the Telex sent was so inadequate let alone reckless. There was no agreed or common Manual between Cathay and ANZ and each side was operating on the basis of what it thought to be the correct Valuable Cargo Telex. What is important in this context is that Ben did follow the Manual's Address Table and sent the Telex to the correct addresses namely to AKLFFTE (Auckland Cargo Department). He did not know that at the ANZ Cargo Department end, ANZ was expecting a Valuable Cargo Telex to be in a form specifically addressed for the attention of Duty Supervisor of Cargo Department. The Telex did contain the vital information that there was valuable cargo on board and did say it was in the Diplomatic Locker although it was not in an exclusive telex message relating only to the Money Consignment. Although the Telex was not perfect and Ben Cheng was candid enough to say that with hindsight it could be improved. I do find as a fact that the sending of that Telex by Ben Cheng was not reckless act and it follows therefore that the first of the two disputed Triple Requirements is not satisfied. On the second of the disputed Triple Requirements, it is even easier to come to a conclusion as there is no doubt on the evidence that Ben Cheng was not aware of a risk of damage or loss resulting from his Telex. It was never a case of someone who knew what he was doing might be dodgy but nevertheless took a risk. He simply had no actual knowledge of probability of damage and in fact the evidence is so one sided that no one either from the Plaintiffs or from ANZ even suggested in cross examination of Ben Cheng that he might have knowledge that damage would or might result from his Telex. It follows therefore from my finding of fact that there was no actual knowledge by Ben that damage would probably result that the second of the disputed Triple Requirements is not satisfied. In the circumstances, I find that Cathay would be entitled to the Warsaw Convention Limit unless I find that ANZ was not entitled to that Limit in which case as conceded by Mr. Barma, Cathay would be liable in the full sum as result of the operation of the Guadalajara Convention. THEFT BY ANZ CARGO/RAMP The main thrust of the case of the Plaintiffs' was directed against ANZ and in particular on the aspect which is the easier part for the Plaintiffs to establish, namely a case of theft or intentional damage by employees of ANZ. Eight servants of ANZ were easily identified as those who could be said to be relevant servants in the course of employment who might have stolen the Money Consignment. Those eight employees are the following:- ANZ SERVANT 1ST SHIFT (6 AM to 2 PM) 2ND SHIFT (2 PM TO 11 PM) Cargo Supervisor Thomsett Samuels Cargo. Clerks Palmer Garden Ward Billing Ramp Coordinator Clinton Brown Henderson Of these eight persons ("8 Suspects"), four of them gave evidence before me, namely Thomsett. Palmer. Garden and Samuels and four did not. I have however the Hearsay Witness Statements of all four of the others, namely Ward, Billing, Clinton Brown and Henderson. Under this Theft Issue two questions require to be answered. The first question is whether it could be established by the Plaintiffs that one or more of the 8 Suspects stole the Money Consignment. The second question is whether any other employees of ANZ could be said to have stolen the Money Consignment in the course of the employment. The primary case of the Plaintiffs is however against the 8 Suspects. It is now necessary to describe the evidence adduced before the Court on what happened in Auckland which eventually led to the loss of the Money Consignment. ANZ operated at that time two shifts at the Auckland Airport, one morning shift from 6 a.m. to 2 p.m. and one afternoon shift from 2 p.m. to 11 p.m. Two different departments of ANZ were particularly involved with Valuable Cargo which arrived at Auckland Airport, namely the Cargo Department and the Ramp Office. The Ramp Office is at the Terminal Building where the Aircraft stopped and discharged its cargo and passengers. The Cargo Office was located some distance of about half a mile from the Ramp Office. The Cargo Office was where incoming telexes were first received and where the Cargo Department Duty Supervisor and Clerks work to process documents and prepare for meeting an aircraft and its valuable cargo. The Ramp Office is where the key to the Diplomatic Locker was kept and in charge of that Ramp Office and the key to the Diplomatic Locker ("Key") was the Ramp Coordinator. A Valuable Cargo was invariably loaded into the Diplomatic Locker which was situated inside the Service Container. The Service Container was normally the last container to be loaded onto the aircraft and the first to be discharged and the reason is that the Service Container apart from having built onto one side the Diplomatic Locker also into its open area was stowed the Crew baggage and the First Class baggage. The Key was a special key which opened the Diplomatic Locker of ANZ aircrafts. The Service Container with the Valuable Cargo locked inside the Diplomatic Locker would normally be met at the Baggage Disassembly Area which was a short distance from the aircraft where all luggage were towed there and discharged by loaders and there the Diplomatic Locker would be opened with the Key by the Cargo Clerk or Cargo Supervisor accompanied by the Security guard. The procedure described by the Witnesses (there is not too much dispute about this) is that upon receipt of a Valuable Cargo Telex notifying the forthcoming arrival of Valuable Cargo ("Valuable Cargo Telex"), the Cargo Clerk would so inform the Cargo Department's Duty Supervisor who would then arrange for the Valuable Cargo to be met. The Key at the Ramp Office to the Diplomatic Locker would be collected by the Cargo Clerk or Duty Supervisor who was collecting the Valuable Cargo and the Security Department would normally also be involved and attend when the Valuable Cargo was collected. After collection of the Valuable Cargo, it was then taken back to the Cargo Department where it would go into special storage. The 8 Suspects were involved with this Money Consignment in one way or another because of the relevant events straddling two shifts and because the two Departments were both involved with the loss. Mr. Thomsett was the Duty Cargo Supervisor in the Cargo Department of the morning shift and working under him were two Cargo Clerks. Mr. Palmer and Mr. Garden. Mr. Samuels was the Duty Cargo Supervisor in the Cargo Department in the afternoon shift and working under him were two Cargo Clerks, Mr. Ward and Mr, Billing. In charge of the Ramp Office and therefore the Key to the Diplomatic Locker was Mr. Clinton Brown in the morning shift and Mr. Henderson of the afternoon shift. It was clear from the evidence that all 8 Suspects either had the Key in their possession (Clinton Brown Ward) or in the course of their work could have obtained access to the Key (Thomsett, Palmer, Garden. Samuels, Billing and Henderson) during those relevant hours when the Money Consignment was lost. They therefore became easy suspects. But did any one of them steal the Money Consignment. To be able to properly answer that question, it is first necessary to understand how it came about that the Money Consignment was not picked up immediately after the arrival of the aircraft. Mr. Palmer was the office clerk in the Cargo Department of the morning shift whose duty it was to look at the incoming telexes and then to put any Valuable Cargo Telex on the desk of Mr. Thomsett, the Duty Cargo Supervisor of the morning shift. He said Valuable Cargo Telex for him was one which was exclusive to the valuable cargo, addressed to duty cargo supervisor, security and ramp and it would indicate Airway Bill No., pieces and weight of cargo and with notation such as please safeguard on arrival. This is of course quite correct as provided in the ANZ Manual and as said by Mr. Copas, the Senior Security officer of ANZ. The Telex which Palmer saw that morning was according to him not such a Valuable Cargo Telex and he regarded the Telex as mere onboard or stowage telex with mixed information relating to live fish. This stowage telex or signal is what the witnesses called the second signal, whereas the important signal for ANZ is the first signal, namely a Valuable Cargo Telex. It was because Mr. Palmer did not regard the Telex as Valuable Cargo Advice that he thought it was not necessary to notify Mr. Thomsett, his Duty Cargo Supervisor. Thus it was his action or rather his reaction to the Telex which led to the Money Consignment not being met at the Baggage Disassembly Area. Therefore the one person in the Cargo Department who could have the opportunity to take appropriate action if he had realised that Valuable Cargo was coming in, did not take any action and this was the main and predominant reason why the Money Consignment was left in the Diplomatic Locker. Now either this was a deliberately planned act by Mr. Palmer and he was therefore a prime person involved in the theft or he was not such a villain. Mr. Palmer struck me in his oral evidence as a person who was truthful and honest and was giving the best evidence he could. I accept his evidence and I do not believe that he was involved in the stealing of the money. I next turn to Mr. Garden. He was the newly resuming work collecting clerk who went to the Document Office at the Terminal Building and he picked up the Manifest but apparently he did not pay attention to the fact that Valuable Cargo was listed in the Cargo Manifest as being on board. He said valuable cargo was not his responsibility but that of security, duty cargo supervisor and ramp coordinator. Mr. Garden's main preoccupation which emerged clearly in his oral evidence was the live fish on board and it called for his top priority attention. Being the soft, gentle and caring person he was, he focused his attention on the live fish and all the work involved with that aspect. Mr. Garden struck me as not very bright, excessively over-concerned with the small animals or living things of the world but he is not a thief. I accept his evidence and what he told me and it therefore follows that I find as a fact that Mr. Garden was not involved in the stealing of the Money Consignment. Mr. Thomsett had even less contact with the Money Consignment. He said that for him, a Valuable Cargo Telex had to be exclusively dealing with a particular valuable cargo and it should be addressed to cargo department, security and ramp and for the attention of duty supervisor and it should state the AWB No., the number of pieces, the weight, where it was stored, the number of the Service Container and should finish off by asking ensure safeguard on arrival. For him there was no receipt of a Valuable Cargo Telex that day. He might have been the Duty Supervisor but he expected Mr. Palmer to alert him to Valuable Cargo Telex and Mr. Palmer did not. Mr. Thomsett also said in his Witness Statement that he did not expect someone like Mr. Garden to pick up and report on the existence of valuable cargo from his job of processing the Manifest because there was a separate telex procedure for notification of valuable cargo. In his oral evidence, he modified his answer somewhat. Anyway, Mr. Garden did not notify Mr. Thomsett about valuable cargo and it seemed to me quite natural for Mr. Thomsett to know nothing about the Money Consignment. Basically he justified no action being taken that day by his clerk either in relation to the Telex or in relation to the Manifest and he said he disagreed with Mr. Copas, the ANZ security officer who said in a memorandum dated 5th May (page 33) that the Telex signal ought to be picked up by ANZ Cargo Department and actioned. As will be seen later in my analysis, I believe that Copas might have been too demanding and applied too high a standard. Mr. Thomsett for me is a more than reasonable witness. He gave his evidence quite professionally and he seemed to me to be telling the truth as best as he could. I accept his evidence and I find as a fact that he was not involved with the stealing of the Money Consignment. This leaves so far as the morning shift is concerned, only Mr. Clinton Brown. He had of course possession of the Key and it was physically possible for him to go to the Diplomatic Locker and take the money. But was there any evidence or even reason to suppose that he knew about the existence of money in the Diplomatic Locker. It was not suggested that he was either in possession of the Telex or of the Manifest and therefore knew about the existence of the Money Consignment and the fact that it had not been picked up and that therefore he took the opportunist chance and helped himself to the money. It is true that he had not come to give evidence and all I have is a record of interview of Mr. Clinton Brown with the Auckland Police at 16.25 on 4th of May 1988. In that Interview he said that no one that day came in to get the Key while he was on duty and he said that the Control Room in the Ramp Office was so busy that day that anyone could come in and uplift the Key without being noticed. He was obviously investigated by the Auckland Police for possible involvement with the theft but the police apparently did not find any evidence against him. I have no reason to suspect, let alone be able to find (even on the basis of balance of probabilities) that he was guilty of stealing the Money Consignment. Of the 4 persons in the afternoon shift, Mr. Samuels had no direct involvement with the Money Consignment and there was not even evidence to suggest that he knew about the Telex or the Manifest before it was realised that the Money Consignment was missing. It was something dealt with at an earlier shift. Mr. Samuels gave extensive evidence before me and he was skilfully arranged to bat first for the ANZ team and he did well. In fact it was he who sent Ward and Billing to check the Diplomatic Locker and then raised the alarm about the missing money. Mr. Samuels was cross-examined about the strange aspect of his Witness Statement which was in identical terms to the Witness Statements of Ward and Billing in which they all said that no diplomatic mail was found by Ward and Billing when the contemporaneous documents were to the contrary. This is a curious aspect of the case and there is no doubt that the diplomatic mail was found and the possibility is either that it was a matter of coincidence that the Witness Statements of the three persons, Samuels, Ward and Billing were all mistaken about that point of diplomatic mail not found or that they discussed the evidence and agreed to come up with an untrue version thereby suggesting that they were all involved in the matter of Ward and Billing opening of the Diplomatic Locker and possibly stealing the Money Consignment. This boils down to either all three of them are guilty of the theft of the Money Consignment or all three of them are innocent and the common mistakes with the Witness Statements is not evidence of their being guilty of theft. I have considered this aspect and I have seen Mr. Samuels giving evidence before me and I accept Mr. Samuels as a truthful witness. I find as a fact that he was not involved with the stealing of the Money Consignment. Ward and Billing must now be considered, together. Their involvement, as afternoon shift clerks were to go to the Diplomatic Locker to see if they could locate the Money Consignment. They went but did not find it. They did not give oral evidence before me and the Court was only furnished with the hearsay evidence by way of their Witness Statements. It would seem that Samuels. Ward and Billing in their Witness Statements all said that Ward and Billing found the Diplomatic Locker empty and there was nothing not even diplomatic mail but that on the 27th April, the Diplomatic Mail was said to be found by Ward and Billing in the Diplomatic Locker. This is a curious aspect that remained unexplained at the end of Trial and without Ward and Billing giving evidence, this apparent discrepancy might suggest either Ward and Billing are not telling the truth in their Witness Statements or that they had forgotten the true situation in their Witness Statements or that the previous information given by them on the 27th April 1988 (which led to Samuels writing in his diary about finding Diplomatic Mail) was untrue. As there seems to be little controversy that the Diplomatic Mail was found, the only question was whether it was found in the Diplomatic Locker or if so found at the time was it found by Ward and Billing and why did they not say so in the Witness Statements. The question for me is whether this unsatisfactory aspect ought to lead the Court to come to a finding that Ward and Billing were involved with the theft of the Money Consignment. In my view, even applying the lowest possible test of on the balance of probabilities, I cannot come to such a finding. In my view there is really insufficient evidence for the Court to draw that inference. I find therefore as a fact that they Mr. Ward and Mr. Billing were not involved with the theft of the Money Consignment. Finally 1 turn to the last of the 8 Suspects, namely Mr. Henderson the afternoon shift Ramp Coordinator. He gave a Witness Statement in which he said that he was either not on duty at the time or was on leave and said he had no knowledge of the missing of the Money Consignment. Mr. Ward and Mr. Billing in their Witness Statements did not mention Henderson by name or that they had any dealings with him that afternoon. If Mr. Henderson was not on duty, it is not clear who was on duty at the Ram Office that afternoon but there is no evidence to suggest that what Mr. Henderson had said in his Witness Statement is untrue. It follows therefore I also cannot link him to the theft of the Money Consignment. The first part of the Plaintiffs' claim against ANZ based on the theft by 8 Suspects in my view has failed. I therefore turn to the second part of the Plaintiffs' case based on theft by unknown servants of ANZ who stole the Money Consignment in the course of their employment. A case based on the theft by unknown servants of ANZ is very different however from a case based on known 8 Suspects. The Plaintiffs' heavy reliance on the theft by 8 Suspects was grounded on the opinion expressed by Mr. Copas, the senior security officer of ANZ and some encouragement from the Bench at the Trial. According to Mr. Copas, the theft could not be easily committed by anyone and would require the usage of the Key by someone who worked for ANZ and who would not be easily found out or stopped when he approached the Diplomatic Locker to take out the Money Consignment. There is in my view unfortunately more than an element of speculation in the opinion of Mr. Copas and I have considerable reservation on some of the inferences and opinions advanced by Mr. Copas. I accept of course that the thief would very probably need the Key to open the Locker and that it was not a matter of forcing the Locker open or using any ordinary key to open the Diplomatic Locker. But this does not mean that whoever was the thief must be either someone from ANZ or that the servant from ANZ must be stealing in the course of the employment. My encouragement on theft by the 8 Suspects might be somewhat misleading but once the evidence on theft by 8 Suspects is carefully analyzed (not for all 8 globally but by reference to each Suspect) and rejected as not capable of sustaining a case of theft by 8 suspects, then it can readily be seen that the theory of theft by unknown ANZ servants becomes even more difficult to sustain. For me the evidence on this alleged theft by unknown ANZ servants is thin and largely speculative. Unfortunately, a large number of people would have the means of knowing about the Money Consignment either from the Telex or from the Manifest and although many of them might be employed by ANZ, they would be people who had no business whatever with the Money Consignment or even the Diplomatic Locker and who could not be said to be stealing in the course of employment if they did the stealing. There was evidence that many servants of ANZ wore red security tags (people permitted to work at airside) as opposed to yellow security tags but not everyone who wore red security tags and who stole the Money Consignment would be an ANZ servant stealing in the course of employment. Further the system of keeping the Key seemed to be somewhat relaxed and informal that many people could obtain the Key and open the Diplomatic Locker. There were according to Mr. Samuels, a large number of people including loaders, engineers, traffic staff, clerical and management, maintenance people and cleaners, agricultural and customs men who were all potential thieves. After the Auckland Police had investigated for so long and could not come out with any meaningful result, in my judgment it would be largely a matter of speculation for this Court to do its own detective work so to speak and come to a conclusion (even on a balance of probabilities) that the Money Consignment was stolen by one or more ANZ servants done in the course of employment. I regret to say that the evidence was insufficient to support such a conclusion. Therefore the claim based on the theft by unknown ANZ servants also fail. This aspect never had much of a chance compared with the case against the 8 Suspects. RECKLESSNESS BY ANZ CARGO/RAMP The last head of the claim of the Plaintiffs rests on whether a viable case could be made out that one or more of the servants of ANZ was reckless, with knowledge and in the course of the employment. The target again can only be against one of the 8 Suspects except in this case, the Triple Requirements must be satisfied in relation to any particular one of the 8 Suspects said to be reckless so as to cause the loss. Having regard to my earlier assessments of Mr. Palmer, Mr. Garden and Mr. Thomsett, it is clear that the Plaintiff must fail on the test of recklessness by each of these three officers and also on the test of knowledge of probability of damage. I accept their evidence and their truthfulness and in these circumstances, any claim based on Article 25 recklessness for the act of Palmer, Garden and Thomsett must fail. So far as the afternoon shift of Samuels, Ward and Billing are concerned, no case was even suggested that they were reckless in not doing something which they ought clearly to have done and that such omissions were so reckless as to cause the loss. In the case of Samuels. Ward and Billing it seems to me it was theft or nothing and there was really no formulated case of recklessness in relation to the conduct of those three. This therefore leaves only the act of the Ramp Coordinator and in particular in respect of the acts of Mr. Clinton Brown and Mr. Henderson. Mr. Henderson has to be eliminated immediately because he was not there at the time. The charge against Mr. Clinton Brown as I understand it are two fold, firstly in not checking the Diplomatic Locker immediately or soon after arrival and secondly in not taking care of the Key. This aspect although explored somewhat in the evidence was not even pleaded and there was nothing in the pleading as to suggest that there was a standing ANZ Manual requirement which the Ramp Coordinator had deliberately and recklessly ignored with knowledge of probable loss. What was explored at the Trial was to capitalise on what was said by Mr. Clarke in a memorandum dated 4th May 1988 at page 35 of Bundle that:- "The Ground Handing Manual Section C5 paragraph 20 states that the Diplomatic Locker must be inspected on arrival on each service. This was obviously not carried out." The evidence which emerged at the trial is that as a matter of practice because of the shortage of labour, there was consistently no opening of the Diplomatic Locker shortly after the arrival of the aircraft. But because of the operation of the separate Valuable Cargo Telex advice the non opening of the Diplomatic Locker immediately after the arrival of the aircraft had never caused any problem or loss of valuable cargo. It was clear that Mr. Clinton Brown did not consider it a problem when he was asked about it by the Auckland Police and it is equally clear that this was not an aspect which ANZ had prepared for in coming to resist the claim at the Trial. The question for me which is not at all easy is whether the non opening of the Diplomatic Locker immediately or shortly after the arrival of the aircraft, which was in contravention of the said provision of the Ground Handling Manual (which was subsequently in August 1988 apparently tightened up by insertion of new additional provision) could be said to be recklessness on the part of Mr. Clinton Brown and with knowledge by Mr. Clinton Brown that damage would probably result from his omission. In my judgment a fair conclusion would be no to both questions. Having regard to the fact that this had not caused any problem in the past, it seems to me that even if it could be shown that the breach of the Manual might be negligent it would be far from establishing recklessness. I believe that if Mr. Clinton Brown was asked he would say that it was really not a problem and he did not foresee any likelihood of damage which could be caused. There might have been previously losses but there was no evidence that Mr. Clinton Brown knew anything about them or that they were in any way connected with the non opening of the Locker. It seems to me therefore and I so find that there was no recklessness with actual knowledge of probable loss based on Clinton Brown not opening the Diplomatic Locker soon after the aircraft landed. This head of claim of course would not even run against Mr. Henderson of the second shift even if he was there in the afternoon as by the time he assumed duty, it was no longer the function of the afternoon shift to open Diplomatic Locker which ought to have been done if at all some time ago during the morning shift. This then leaves finally the question of whether there was recklessness in not controlling the Key properly with knowledge of probable damage. Three elements are involved in this charge which could be made against both Clinton Brown and the acting Ramp Coordinator that afternoon (as Henderson was not there). The first element is: Was there any Key taken from the Ramp Office which was used to steal the Money Consignment. Second element is: Was Clinton Brown reckless in having a system whereby the Key was taken away improperly. Third element is: Did Clinton Brown have actual knowledge that his reckless system of Key keeping would probably cause loss. Having regard to the lack of the specific pleading of recklessness with knowledge in relation to the guarding of Key by the Ramp Office, it is not surprising in a way that no one from the Ramp Office came to Hong Kong to give evidence or even to deal with this aspect in the Witness Statements. This had an important impact on the way I am able to reach conclusions. I am not satisfied that on the 3 elements stated earlier, that the Plaintiffs have shown that there was recklessness by either Clinton Brown or someone acting in Henderson's place (we don't even know who he might he) in allowing the Key to be improperly taken away or that such Key was used to open the Locker or that such Ramp Coordinator know that such recklessness would probably cause damage. It follows therefore that I hold that there was no recklessness by any relevant servant of ANZ with knowledge of probable damage. In the circumstances, ANZ is entitled to rely on the Warsaw Convention Limit and the Plaintiffs' attempt to break such Limit against ANZ also fails. INDEMNITY The question of the indemnity by ANZ to Cathay would only arise if there is any liability found against Cathay and as I have found in favour of Cathay on the Warsaw Convention Limit point, indemnity does not arise. CONCLUSION The conclusion is therefore that the Plaintiffs claim against Cathay and ANZ for the full amount of the claim is rejected and the Plaintiffs are only entitled to the Warsaw Convention Limit, the liabilities for which both Defendants had already admitted. Save for the Warsaw Convention amount of HK$837.00 admitted by Cathay and ANZ, judgment must be entered against the Plaintiffs. The Plaintiffs shall pay the costs of the Action to the 1st Defendant and to the 2nd Defendant. William Waung Judge of the Court of First Instance Representation: Mr. Clifford Smith for the Plaintiffs instructed by Messrs Munro, Claypole & Reeves Mr. Aarif Barma for the 1st Defendant instructed by Messrs Haldanes Mr. Geoffrey Ma, S.C. and Mr. Richard Zimmern for the 2nd Defendant instructed by Messrs Johnson, Stokes & Master PAGE PAGE PAGE - &`#$ . CATHAY PACIFIC AIRWAYS LIMITED AND ANOTHERS Title HCCL000037/1990 HANG SENG BANK LIMITED AND ANOTHER v. CATHAY PACIFIC AIRWAYS LIMITED AND ANOTHERS Normal.dot YANGLX Microsoft Word 9.0 Judiciary Hong Kong SAR Judiciary Hong Kong SAR HCCL000037/1990 HANG SENG BANK LIMITED AND ANOTHER v. CATHAY PACIFIC AIRWAYS LIMITED AND ANOTHERS Title Microsoft Word Document MSWordDoc Word.Document.8 HCCL000037/1990 HANG SENG BANK LIMITED AND ANOTHER v. CATHAY PACIFIC AIRWAYS LIMITED AND ANOTHERS Normal.dot YANGLX Microsoft Word 9.0 Judiciary Hong Kong SAR Judiciary Hong Kong SAR HCCL000037/1990 HANG SENG BANK LIMITED AND ANOTHER v