WONG MEI NA v. GENRYOKU SUSHI CO LTD

DCEC 892/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 892 OF 2000

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REASONS FOR RULING

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1. This hearing concerned the costs of the Summons dated 10th October 2002 ("the Summons").

2. The Respondent seeks to vary my order that the Applicant should have the costs of the Summons. This is my reason for granting the Respondent's application to vary.

3. The Summons was taken out by the Applicant for leave to accept the payment into court made by the Respondent. The Respondent had made three payments into court, the last being on 10th September 2002. The only reason why the leave for payment out had not proceeded by way of a consent summons was because the parties could not agree on who should bear the costs after the 10th September 2002.

4. On 14th November 2002 I heard substantive arguments on the Summons. The arguments were confined to the issue of costs as disputed, the parties having agreed that the payment out would be made to the Applicant.

5. Having heard submissions I ruled that the Respondent should pay the Applicant's costs in these proceedings, including the costs of the Summons, up to the 10th September 2002. Under my ruling the Applicant would bear the costs after 10th September 2002. In light of my ruling the Applicant was also ordered to pay the costs for the hearing on 14th November 2002. The Respondent was ordered to pay the costs for the adjourned hearing of the Summons on 16th October 2002 given my finding that the submissions on 14th November 2002 could have been heard on 16th October 2002 had it not been for the stance adopted by the Respondent then.

6. In this application Ms. Kwan for the Respondent relies on the Respondent's letter date 8th October 2002 marked "without prejudice save as to costs" ("Calderbank letter"). The Calderbank letter was written in response to the Applicant's letter dated the same accepting the payment into court made. In the Calderbank letter the Respondent demanded that the Applicant should be responsible for the post-10th September 2002 costs if she was to accept the payment into court.

7. Ms. Kwan argues that, had the Applicant agreed to the proposal as to costs, the payment out could easily have been dealt with by way of a Consent Summons. It would not have been necessary to issue the Summons and the hearing on 14th November 2002 could have been avoided.

8. Ms. Kwan's concern is that by ordering the Respondent to pay for the costs of the Summons, the Respondent would not be paying for just the Summons itself, which costs is minimal, but also the time spent for preparing the arguments on 14th November 2002. Since the Respondent has achieved what it had offered in the Calderbank letter Ms. Kwan says the Applicant should be responsible for the costs of the Summons.

9. Mr. Kwan for the Applicant says the Calderbank letter went further than the issue of costs because the Respondent also insisted in the letter that the payment out be made on condition that there was no admission of liability on its part. Therefore, Mr. Kwan says, the Applicant was rightly entitled to reject the proposals in the Calderbank letter.

10. Notwithstanding Mr. Kwan's present stance, it was clear during the substantive hearing on 14th November 2002 that the reason as to why the payment out could not be dealt with by way of a Consent Summons was due to the Applicant's refusal to bear the costs after 10th September 2002.

11. In any event a payment out is a settlement on terms without the admission of liability, Ng Ming Chor v Pui Hing Construction Company Limited & Others DCCJ 496 of 1996 and Chan Lai Heung v Po Leung Kuk DCEC 172 of 2001 referred. The Respondent's demand for the non-admission of liability should not affect the question of costs at issue.

12. In the circumstances the costs order is varied to the extent that the Respondent is to have the costs of the Summons.

13. There being no application for costs, I make an order that there is no order as to costs of this hearing. The Applicant's own costs to be taxed in accordance with Legal Aid Regulations.

Representation:

Mr. M. K. Kwan of Messrs. M. K. Kwan & Co for the Applicant

Ms. Corrina L. Y. Kwan of Messrs. Ip Kwan & Co for the Respondent

Appeal by the applicant dismissed by Court of Appeal. Please refer to CACV82/2000 dated 16 July 2003

DCEC 892/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES' COMPENSATION CASE NO. 892 OF 2000

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RULING

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1. This hearing concerns the question as to who should bear the costs of these proceedings after 10th September 2002, being the date of the last payment into court made by the Respondent in satisfaction of the cause of action in respect of which the Applicant claims against it.

2. By her application dated 13th October 2000 the Applicant claimed compensation against the Respondent as a result of an accident on 14th October 1998. On 18th January 2001 the Respondent paid into court the sum of $45,000 which was not accepted by the Applicant.

3. The next relevant event took place on 22nd July 2002 when Dr. Cheung Sek Hong was appointed by the Respondent to examine the Applicant. The examination was initially scheduled for 1st August 2002 but eventually took place on 8th August 2002.

4. On 13th August 2002 the Respondent paid a further sum of $10,000 into court increasing the total payment in to $55,000. The Applicant acknowledged the payment in and requested the Respondent to file and serve a list of documents including vouchers and accounting documents on all sick leave payment made since the accident. The latter were provided to the Applicant on 14th August 2002.

5. On 15th August 2002 the Applicant sought discovery of Dr. Cheung's report and was informed by the Respondent's letter dated 16th August 2002 that Dr. Cheung was in the process of finalizing his report.

6. Directions were then given on 23rd August 2002 for parties to file and serve expert reports and witness statements within 35 days. On 29th August 2002 the Applicant's claim for compensation was set down for trial to be heard on the 4th and 5th December 2002.

7. On 10th September 2002 the Respondent made a further and final payment into court in the sum of $70,000 bringing the total payment in to $125,000. By a letter dated 11th September 2002 the Applicant acknowledged receipt of the notice of further payment into court made but considered it was still "far too low for acceptance" and repeated her request for a copy of Dr. Cheung's report.

8. On 14th September 2002 the Applicant received a copy of Dr. Cheung's report dated 13th September 2002. In his report, Dr. Cheung made reference to medical notes from the Hospital Authority hospitals and to Hess' chart investigation conducted on the Applicant by the Department of Optometry and Radiography of the Hong Kong Polytechnic University on 29th August 2002. On 23rd September 2002 the Applicant wrote to the Respondent asking for copies of the medical notes and for the report on the Hess' chart investigation. The requested documents were sent to the Applicant by the Respondent under cover letter dated 28th September 2002 but were not received by the Applicant until 30th September 2002.

9. On 8th October 2002 the Applicant wrote to the Respondent accepting the payment into court totaling $125,000 in full and settlement of her claim plus costs. On 10th October 2002 the Applicant took out a Summons for leave to accept the payment into court. Further correspondence ensued between the parties as to whether the Respondent was taken to have admitted liability and also on who should bear the post 10th September 2002 costs. The issue as to liability was eventually resolved between the parties. What remains in issue is whether the Applicant is entitled to, as she claims she is, costs of these proceedings up to 8th October 2002 being the date of acceptance of the payment-in or whether the Respondent is entitled to costs of these proceedings after 10th September 2002.

10. The Applicant's summons for payment out came before me on 16th October 2002. Mr. Kwan's written and oral submissions for the Applicant at the hearing were upon the premise that parties had agreed for payment out to be made and the only dispute was on costs incurred after 10th September 2002. However, it transpired during Ms. Kwan's oral submissions for the Respondent that this was not the case. Ms. Kwan said the Respondent would not agree for payment out unless all issues, including costs, were agreed and since there was a dispute on costs there could be no payment out and the matter would go to trial. Mr. Kwan was taken aback as this was contrary to his understanding. The hearing was adjourned upon joint application of the parties for them to take further instructions.

11. At the adjourned hearing on 14th November 2002 the parties confirmed agreement had been reached for the payment out of the sum of $125,000 and the only issue was who should bear the costs of these proceedings post 10th September 2002.

12. Rule 20 of the Employees' Compensation Rules deals with the procedure as to payment into court in an employees' compensation case:-

"(1) A respondent from whom compensation is claimed may pay into court a sum which is considered by him to be sufficient to cover his liability.

(2) If no greater compensation be awarded than the sum of money which the respondent has paid into court, the court may order that any costs incurred by such respondent, after payment by him into court of the said sum of money, shall be paid by the applicant."

13. Unlike Order 22 of the Rules of the District Court, Cap 336, rule 20 makes no provision for the time for acceptance of the payment into court nor does it provide for the stay of proceedings upon such acceptance.

14. Mr. Kwan argues that rule 20 only applies if there had been a trial and in the event that there was no trial an applicant is entitled to the costs of the whole proceedings up to the time of acceptance of payment in provided the acceptance was made within a reasonable time. It is clear from Mr. Kwan's argument that the restrictive interpretation he seeks to impose is in relation to rule 20(2) only. Although Mr. Kwan did not say what constitutes a reasonable time, it is implicit in his arguments that reasonableness depends upon the circumstances of the case. In this case, Mr. Kwan says it was reasonable for the Applicant to wait until 8th October 2002 before accepting the payment in because she did not receive the most crucial and influential report namely, the report from the Hong Kong Polytechnic University until 30th September 2002. Therefore, Mr. Kwan says, eight days was a reasonable time for the Applicant to seek legal advice and to consider the payment in.

15. I find Mr. Kwan's argument that rule 20(2) only applies in the event of a trial difficult to follow. Rule 20(1) deals specifically with payment into court by a respondent. A payment in is a settlement on terms in which the claim is disposed on such terms without adjudication. In Ng Ming Chor v Pui Hing Construction Company Limited & Ors DCCJ 496 of 1996 Judge To cited Devlin L.J in A. Martin French v Kingswood Hill Ltd [1961] QB 96 as to the purpose of payment in and said "The whole purpose of the payment in is to dispose of the action without having to decide on the merit". I agree this is the object of a payment in. In practice the majority of claims for compensation are settled out of court without trial. Such settlement usually, though not always, occurs when payment in is accepted.

16. Under section 18A of the Employees' Compensation Ordinance, Cap 282, compensation and any matter arising out of the proceedings in respect of such claims must be determined by the District Court. Where a claim is settled by the acceptance of a payment in, the court's determination would take the form of an endorsement of a consent order so that the compensation awarded by the court is effectively the same amount as the payment in, see: Chan Lai Heung v Po Leung Kuk DCEC 172 of 2001.

17. In the premises I do not accept Mr. Kwan's arguments that rule 20(2) is only applicable in the event of trial. Had it been so intended there would have been express provision to that effect and rule 20(2) would not have appeared together with rule 20(1) which deals with payment into court.

18. In this case the sole reason why the Applicant did not accept the payment in prior to 8th October 2002 was because of the lack of discovery of medical reports, particularly the report from the Hong Kong Polytechnic University. Mr. Kwan says the Applicant could only be advised after these reports were discovered. It is to be noted that, despite granting 14 days for which to accept a payment in, Order 22 of the Rules of the District Court makes no provision that discovery must be given before the expiry of this 14 days period. Neither the Rules of the District Court nor the Employees' Compensation Rules imposes any restrictions as to when a payment into court can be made or that there must be discovery before a payment in can be made. Therefore whilst it may well be that the Applicant required some time to consider the payment in after receiving the medical reports, that does not mean the Respondent should be responsible for the costs incurred during this period particularly when those advising the Applicant must be aware of rule 20.

19. I am not therefore persuaded that the Applicant's reasons for not accepting the payment into court until 8th October 2002 is a sufficient ground to make a costs order other than the one indicated by rule 20.

20. Having said that I find that the argument on costs could have been made on 16th October 2002. I do not accept Ms. Kwan's submissions that she thought everything, including costs, had to be agreed before an order for payment out can be made. Under rule 20 the court clearly retains discretion with regard to the question of costs. In the circumstances the Applicant should have the costs of the hearing on 16th October 2002.

21. The order I make is as follows:-

a. The Applicant do have leave to accept the payment into court in the total sum of $125,000 made by the Respondent on the 18th January 2002, 13th August 2002 and 10th September 2002 respectively in satisfaction of the cause of action in respect of which the Applicant claims against the Respondent.

b. The said sum of $125,000 be paid out of court to the Applicant's solicitors.

c. The Respondent do pay the Applicant's party-and-party costs in these proceedings up to 10th September 2002, the costs of the Summons dated 10th October 2002 and the costs of the hearing on 16th October 2002 to be taxed if not agreed.

d. The Applicant do pay the Respondent's party-and-party costs in these proceedings after 10th September 2002 including the costs of the hearing on 14th November 2002 to be taxed if not agreed.

e. The Applicant's own costs be taxed in accordance with the Legal Aid Regulations.

Representation:

Mr. M. K. Kwan of Messrs. M. K. Kwan & Co for the Applicant

Ms. Corrina L. Y. Kwan of Messrs. Ip Kwan & Co for the Respondent