Hong Kong Court Grants Declaratory Relief for Unclaimed Vehicles at Car Park

Hong Kong’s District Court recently granted a car park operator default judgment in ATL Logistics Centre Hong Kong Ltd v. Wellfit Chun Yip Logistics Ltd DCCJ 3840/2023 for unpaid parking charges and declarations passing parked vehicles at the car park to the operator for sale. The court accepted that the plaintiff had genuine need for the declaration and justice would not be done if such relief were denied.

This judgment illustrates legal remedies available to car park operators in dealing with unclaimed vehicles parked at car parks.

Background

The vehicle owner (the "Defendant") had left two trucks in the car park of a car park operator (the “Plaintiff”), for nearly a year without paying parking charges. Prior to the commencement of the legal proceedings, numerous demand letters had been issued to the Defendant and the notice of intention to sell had also been advertised on Chinese and English newspapers circulated in Hong Kong. But the Defendant still failed to remove the cars or repay the parking charges. 

Pursuant to the Terms & Conditions promulgated at the Plaintiff’s car park, upon expiry of relevant notice periods of the demand letters and notices, if the parking charges remain unpaid and cars were not removed, the property of the vehicles would pass to the Plaintiff – who can sell the vehicles and apply proceeds towards settlement of the debt and costs.

Accordingly, the Plaintiff applied to the Court for declaratory relief to seek recognition of Plaintiff's proprietary interest in the vehicles. 

Judgment

The Court considered the Terms and Conditions of the car park, providing that the vehicle property would automatically pass to the Plaintiff if the Defendant failed to pay parking charges by a specified deadline after a demand; or if the vehicles parked beyond a certain period and the Plaintiff gave a certain days' notice of intention to sell them. 

The Plaintiff requested declarations in default of notice of intention to defend and a defence under the combined effect of Order 13 rule 6 and Order 19 rule 7 of Rules of District Court. 

In this regard, the usual rule of practice is that the Court would not make a declaration of right in default of defence or without trial. 

For the Court to depart from this rule of practice, it would need to be satisfied that the Plaintiff had a genuine need for the declaration sought – and justice would not be done if such relief were denied.

In this case, the Court took into consideration the following factors:

1. The Plaintiff had a genuine need for the declaration to exercise its right to sell the vehicles and apply the proceeds in accordance with the Terms and Conditions. 
2. The Defendant had been served with the relevant demands for payment and notices of intention to sell, in addition to advertisement of the notice of intention to sell in the press, but had not paid the parking charges or removed the vehicles from the car park.
3. The vehicles had been parked at the car park for nearly a year and the Plaintiff had suffered substantial and continuing loss due to the unpaid parking charges.
4. Further, if the Plaintiff was required to prove its case at trial by evidence at trial, this would increase the time and legal expenses incurred in relation to this case. 
5. The value of the vehicles might have decreased over time, reducing the amount of recovery for the Plaintiff.

Accordingly, the Court exercised its discretion to grant the declaratory relief sought by the Plaintiff, departing from the usual rule of practice that such relief would not be given in default of defence or without trial. 

Takeaway

This case illustrates that notwithstanding the above rule of practice, the Court may still grant declaratory relief in default of defence without trial in circumstances where the plaintiff had a genuine need for the declaration sought – and if justice would not be done if such relief were denied. 

However, the Court will not rubber-stamp an uncontested application without careful consideration of the application.

The Court’s declaratory relief granted in this case may help to avoid future dispute over the legitimacy of selling unclaimed vehicles. Car park operators can consider obtaining a Court declaration in appropriate cases to affirm their contractual rights in respect of unclaimed vehicles parked at their car park for a long time; and apply sale proceeds to offset outstanding parking charges.

However, to rely on their Terms and Conditions and obtain declaratory relief, car park operators must ensure that the wordings of the Terms and Conditions are clearly promulgated at conspicuous space at the entrance of the car park. 

The Terms and Conditions must also be carefully drafted, as the Court will not grant a declaratory relief in terms wider than what the plaintiff is entitled to under the contract and what is necessary to do justice.