Employee's Compensation Case2004

CHAN WAI YIN v. WONG SAU PING ADA t/a EVERGREEN TRANSPORTATION CO

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57727-EN-2007-06-14

CHAN WAI YIN v. WONG SAU PING, ADA t/a EVERGREEN TRANSPORTATION CO AND ANOTHER

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DCEC97/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 97 OF 2004

______________________

BETWEEN

	CHAN WAI YIN	Applicant
	acting for and on behalf of herself and the eligible members of the family ofYU TAK TIM and as Personal Representativeof the Estate Yu Tak Tim, Deceased
	and
	WONG SAU PING, ADA (黃秀平) trading asEVERGREEN TRANSPORTATION COMPANY	1st Respondent
	EMPLOYEES COMPENSATION ASSISTANCE FUND BOARD	2nd Respondent

______________________

Coram: Deputy District Judge K Lo in Court

Date of Hearing: 13 and 14 June 2007

Date of Delivery of Judgment: 14 June 2007

________________

J U D G M E N T

________________

Background

1. This is a fatal employees’ compensation case where the widow Chan Wai-yin claims employees’ compensation against the 1st Respondent as a result of fatal traffic accident on 28 June 2002 to her husband Yu Tak-tim, the deceased.

2. It is not in dispute that the deceased was a cross-border container truck driver and that on 28 June 2002 he was driving a container tractor bearing Hong Kong registration number GH5094 and China registration number 粵Z.SJ03港 (hereinafter called “the vehicle”) travelling from Shantou to Shenzhen, when he met the tragedy.

3. The 1st Respondent had not responded to these proceedings save that she had previously sent a note to the Labour Department denying any employment relationship between her and the deceased.

4. The 2nd Respondent contests both the liability and quantum in this case.

Issues

5. The two main issues before this court are:

(a) was the deceased an employee of the 1st Respondent or an independent contractor at the time of accident;

(b) what was the average monthly earnings of the deceased prior to the accident, or what was the earnings of the deceased in the month immediately prior to the date of accident.

Applicant’s case

6. As the deceased had died, the Applicant and Mr Lee, an old friend of the deceased are the only witnesses for the Applicant.

7. According to the Applicant, the deceased had told her that he was employed by the 1st Respondent. She was also told that the 1st Respondent had refused to contribute to MPF scheme and had refused to file any tax returns for the deceased as his employer. She had therefore asked the deceased to file a tax return describing himself as an independent contractor.

8. According to the witness statement of the Applicant, the deceased told her that the 1st Respondent was responsible for all payments regarding the obtaining of the driving licence of the deceased in the PRC, providing the vehicle (including all road tax, petrol, insurance and repair), arranging all necessary authorisation papers and permits for the vehicle and the deceased to commute between Hong Kong and Mainland.

9. Applicant also says that the vehicle was registered in Hong Kong under the name of Wong Sau-ping, Ada, i.e. the name of the 1st Respondent.

10. Applicant says to her knowledge, the said Wong Sau-ping, Ada, was the boss of this deceased and the deceased addressed her as Mrs Yip, or Ada, or boss.

11. Applicant says that the deceased had no fixed working hours and every time on receipt of instructions from the said Wong Sau-ping at any time, the deceased was required to go to the company’s car park or the designated place to collect the vehicle, tractor and/or other necessary documentation for performance of his duties.

12. Applicant says that sometimes the deceased had to spend overnight in Mainland waiting to clear the customs and would spend the night in quarters provided by the company.

13. Applicant says every time the deceased finished a journey he would have to fill in a form provided by the 1st Respondent regarding the route taken during the journey and all expenses incurred during the journey. She said the deceased told her that he had to claim salary relying on this document.

14. Applicant has exhibited a form dated 8 April 2002 which spelled out the route of the journey, expenses such as oil, customs fee, toll fee, parking fee, tunnel fee, telephone fee, tyre examination fee, car registration plate, client name, container number, etc. Applicant says the deceased told her that the company on receipt of these forms will compile lists like the ones applicant exhibited to her witness statement on pages 34 and 36 of the trial bundle to calculate wages payable to the deceased for the month.

15. Applicant said usually the deceased did not retain copies of these documents but shortly before the accident, the deceased did tell her that as the wages paid by the 1st Respondent to him appears to be incorrect, he had asked the 1st Respondent for copies of the documents to check the computation of his wages.

16. Applicant also exhibited to her witness statement the bank passbook of the Hong Kong and Shanghai Banking Corporation account of the deceased. According to her, there were the marked entries of salary from 興利, the deceased’s previous employer to the deceased from 7 June 2000 to 20 January 2001, earning on average $21,000 per month.

17. Applicant also pointed out in her witness statement that since 24 March 2001 when the deceased was employed by the 1st Respondent, his salary from 24 March 2001 to April 2002 were also marked in the said passbook. She said she was told by the deceased that as he was not familiar with driving in Mainland, the 1st Respondent had provided mainland drivers to him to lead him the way and/or drive part of the journey in the Mainland but the deceased would have to pay for these drivers.

18. Applicant said according to the record, total salary of the deceased from the 1st Respondent for the period was $290,848 and the total salary for the mainland driver was $12,100. The average income for the deceased prior to the accident was therefore $21,021.72 per month. She said salary of the deceased for the month of April 2002 was $24,000.

19. Applicant said the 1st Respondent has failed to pay salary to the deceased for May and June 2002. She said for these two months, the deceased had job every day and therefore should earn no less than $21,021.72 per month for these two months.

20. Applicant said that salary of the deceased was dependent on the number of journeys undertaken and number of containers transported at the instructions of the 1st Respondent. She said there was no partnership relationship between the deceased and the 1st Respondent.

21. Applicant said that when the deceased died, the Applicant, their son, his parents and his maternal and paternal grandmother survived him.

22. Applicant said since the accident, the 1st Respondent had paid her in total $125,000 including $75,000 for funeral expenses.

23. In Court, the Applicant disagreed to the suggestion by counsel for the 2nd Respondent that the deceased could take up orders from other transportation company or that he was actually working in partnership with the 1st Respondent.

24. She explained that she picked up the job records sheets from some grassland underneath the flyover where the accident took place. Applicant said she had already produced all documents and job records which she found at the scene and at home.

25. Applicant said she knew all telephone orders the deceased received from the 1st Respondent because she heard him address the caller as Mrs Yip, or Ada, or 老闆娘 or names of other colleagues on phone. On receipt of these calls, the Applicant said the deceased would go out. Applicant says the deceased could not refuse taking any orders from the 1st Respondent. Applicant said although she saw the deceased fill out the said journey particulars and expenses forms at home and stapled them with the actual expenses receipts, she could not find any expenses receipts at home.

26. Applicant agreed that for the period 10 June 2002 to 21 June 2002, the deceased did not leave Hong Kong. She said that during this time the vehicle that the deceased used to drive was to be replaced and there was some documentation that needed to be done during this period in order that the new vehicle can cross the border.

27. Mr Lee Man-tung, the deceased’s long time friend, also gave evidence. He confirmed his witness statement which stated that the deceased did tell him that he worked for the 1st Respondent. He also said the deceased told him that his salary was equal to 25.7% of the fee received from clients and that all expenses such as oil, toll fee were paid by the company.

28. He was further told that the deceased could stay at the company’s quarters in Shenzhen and save the overnight accommodation fee.

29. Mr Lee said the deceased told him that he earned on average $20,000 - odd per month.

30. He further said that the deceased told him that the employer had arranged Mainland drivers to assist them but they had to pay for these drivers.

31. Mr Lee admitted on cross-examination that as he had never been a cross-border driver himself and that his knowledge came from others in the trade, that he was not too familiar with the trade of cross-border drivers himself.

32. He said to his understanding the deceased was an employee of the 1st Respondent. He said he had not heard of a self-employed cross-border driver who hired a vehicle for business on his own account in this cross-border transportation business. He said the deceased had no vehicle of his own. He also said that the deceased told him that he did use services of different Mainland drivers and had to pay for them.

Respondents’ case

33. The 1st Respondent did not respond in these proceedings.

34. The 2nd Respondent did not call any witness at trial although they contested the existence of employment relationship between the deceased and 1st Respondent and/or the stated monthly earnings of the deceased at the time of accident by the Applicant.

Liability

35. In determining whether the employment relationship existed between the deceased and the 1st Respondent, I find the passage of Cooke J in Market Investigations Limited v Minister of Social Security (1969) 2QB 173, 184-185 cited by counsel for the Applicant useful.

36. The same reads:

“The fundamental test to be applied is this: is the person who has engaged himself to perform these services performing them as a person in business on his own account. If they understood that question is yes, then the contract is a contract for services. If the answer is no, then the contract is a contract of services. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in a particular case. The most that can be said is that control will, no doubt, always have to be considered, although it can no longer be regarded as the sole determining factor and the factors which may be of importance are such factors as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has and whether and how far his opportunity of profiting from sound management in the performance of his task.”

37. It was said that the indicia of Cooke J was adopted by the Privy Council in Lee Ting Sang v Chung Chi Keung and Another (1990) HKLR 764, 767 - 768 and that applying the test there that on evidence before this Court there was this employment relationship between the deceased and the 1st Respondent.

38. Ms Li, counsel for the Applicant, said that the following factors supported that there was employment relationship between the deceased and the 1st Respondent. In her submission, she quoted:

(a) that the 1st Respondent was the owner of the vehicle driven by the deceased for his work at time of the accident;

(b) the deceased was only allowed to drive the cross-border vehicle provided by the 1st Respondent ;

(c) that the 1st Respondent paid money regularly into the deceased’s account;

(d) the deceased had to keep records of expenses to account to the 1st Respondent;

(e) the deceased’s earnings were calculated net of expenses; and

(f) the 1st Respondent had not produced any documents or records to show the deceased was her business partner.

39. Counsel for the Applicant agreed that the deceased stated to the Inland Revenue in the 2001/2002 tax return that he was a independent contractor, the express agreement between the deceased and the 1st Respondent that there was to be no MPF contribution from the 1st Respondent, the notice from the 1st Respondent to the Labour Department denying the employment relationship, all pointed to the other direction than the existence of an employment relationship between the deceased and the 1st Respondent. However, she urged this Court to ignore the fact that the deceased had previously described himself as an independent contractor. She quoted the case of Chan Kwok Kin v Mok Kwan Hing and Another (1990) 2 HKC65 at 70 - 71 pages and said that:

“The subjective beliefs and intention of, or labels used by, the parties are of no appreciable weight. The matter must be decided objectively.”

40. She also submitted that relying on the case of Chan Kam Wing v Esprit Container Transportation (China) Limited DCEC4/2000, an employment could exist without the existence of an employment contract between the parties and that in the case of Tsang Kar Lee v Rich Long Transportation Limited and Another CACV193/2000, the Court of Appeal had applied the facts cumulatively to support employment relationships did exist in the absence of an employment contract.

41. Counsel for the Applicant invited the Court to place no weight on the denial note by the 1st Respondent to the Labour Department as she did not come forward and testify, nor did she file anything to support her contention.

42. She further submitted that the 1st Respondent was always evading liability. She evaded tax liability by not filing tax return, by wrongfully notifying the Business Registration Office that the business ceased in February 2002 when they still carried on business, she did not take out insurance for the deceased and she had tried every means to avoid liability to pay compensation to the Applicant here.

43. It was said further that the 1st Respondent was dishonest and that she filed the untrue and inaccurate Notice of Cessation of Business to Business Registration Office.

44. Counsel for the Applicant asked this Court to draw adverse inference against the 1st Respondent. She relied on the case of Court of Appeal in Li Sau Keung v Maxcredit Engineering Limited and Another [2004] 1 HKC434 and the Court of First Instance case of Ip Man Shan Henry v Ching Hing Construction Company Limited (No. 2) and Others (2003) 1 HKC256 at 307(E).

45. Counsel for the 2nd Respondent submitted however that the 1st Respondent has ceased business since 19 February 2002, i.e. prior to the accident. He also submitted that as the deceased was dishonest in declaring a smaller yearly income to the Inland Revenue Department and declaring himself to be an independent contractor, although his subjective belief at the time was an employee. It was said that his evidence should not be accepted.

46. He also queried why the Applicant would have in her possession the documents in trial bundle pages 109, 110 and 111. He asked this Court not to accept her evidence in court, i.e. that she had picked them up one to two days after the accident on the grassland underneath the flyover as she told the Court.

47. Counsel for the 2nd Respondent also said that by filing an understated income with the Inland Revenue Department, the Applicant is now estopped from saying that the deceased actually earns $21,000 per month.

48. He also said that as Mr Lee was not an expert in the cross-border driver trade, little weight should be attached to his evidence and further, that what the deceased told him was only hearsay.

49. He also said that the registration of the vehicle in Mainland was in the name of another company called 青海江源貨運有限公司 and the Public Security Bureau had described the deceased as the driver of this company after the fatal accident. He further said that in the 來往香港集裝箱拖車出境簽證簿, the vehicle was registered under the name of 青海江源貨運有限公司 and further that the words 江源 appeared on the vehicle.

50. He said coupled with the note of the 1st Respondent, the lack of MPF arrangement, the tax return filed by the deceased, the fact the deceased was in possession of the job records, the fact that he has to pay for his own mainland drivers and that he got a split of the income from the business orders he performed, etc., all suggested that he was actually a partner with the 1st Respondent and not an employee.

51. It is always a finding of fact in each case whether an employment exists.

52. On evidence before this Court, on the balance of probabilities, I am satisfied that the employment existed between the deceased and the 1st Respondent. Clearly, the 1st Respondent at the material time had the exclusive use of the deceased, and if the deceased did not drive for the 1st Respondent, he could drive for no one as a cross-border truck driver.

53. I rely on the cited case of Chan Kwok Kin that no matter what the subjective intention of the deceased or any party, the matter must be decided objectively and that the intention of the parties are of no appreciable weight. The note by the 1st Respondent to the Labour Department and/or the tax return by the deceased was therefore not of much significant value.

54. Here, at the time of the accident, the deceased was driving the vehicle registered in Hong Kong under the 1st Respondent’s name.

55. Evidence from the Applicant, though hearsay, is the best evidence available in the circumstances.

56. Having had the benefit of seeing both the Applicant and the said Mr Lee in court, I find them both credible and reliable witnesses and accept their evidence. I accept therefore that in this case, the 1st Respondent had provided to the deceased for his use in driving as his employee, the truck, the trailer, the parking fee, toll fee, fuel, vehicle insurance, repair and maintenance and other motor expenses, necessary cross-border licences, permits, documentation, all at the cost of this 1st Respondent and all the responsibility of the 1st Respondent.

57. The deceased could not drive other vehicles across the border, nor can he refuse orders from the 1st Respondent or take orders from other than the 1st Respondent. The evidence in this respect came from the Applicant and Mr Lee and was totally unchallenged.

58. The deceased further has no power to hire anyone to assist him in the discharge of his duty, and that even for these mainland drivers, they were all selected and arranged by the 1st Respondent. The 1st Respondent did have total control on the choice of people who were able to manoeuvre the vehicle in question.

59. The Applicant, in court, explained how some of these documents came about and the Court did not find anything unusual about this explanation. And I accept that these were the circumstances under which the Applicant or the deceased had these documents in question.

60. Here, the income of the deceased was totally dependent on the amount of business given to him by the 1st Respondent. The deceased could only drive the vehicle across the border and no other vehicle. The circumstances surrounding the working conditions of the driver in this case was actually quite similar to that of the driver in the case of Chan Kam Wing, and I find the judgment of Andrew Cheung J, in that case very helpful.

61. Clearly, the deceased here was earning a living by working for the 1st Respondent rather than working as a cross-border driver operating a business on his own with all the risks attached.

62. It was unchallenged evidence that when the Applicant chased the 1st Respondent for the salary of the deceased for May and June 2002, the 1st Respondent replied that she needed time to do the computation. Clearly, the 1st Respondent was still operating the business then, i.e. after the notice of cessation.

63. Further, although the registration of the vehicle in Mainland and as appeared on the cross-border documentation was in the name of 青海江源貨運有限公司, it was unchallenged that the vehicle registered with the Transport Department in Hong Kong was under the name of the 1^st Respondent.

64. In addition, in this case, although the mainland driver was paid by the deceased, the driver was arranged and was therefore selected by the 1st Respondent, whom therefore had control of the choice of people driving, even as assistant driver. The deceased here only had part of the job records for the purpose of clarifying.

65. I find as fact that the deceased here only kept the job records for the purpose of clarifying his earned income with the 1st Respondent.

66. Further, according to the said Mr Lee, as the job had partly been performed by this assistant driver, it was only logical that the deceased should have to pay the salary of this driver out of his own pocket.

67. Having found there was an employment relationship between the deceased and the 1st Respondent, I have no doubt also that at material times, deceased was driving as per instructions of the 1st Respondent. The conduct and behaviour of the 1st Respondent clearly supported this conclusion.

68. Counsel for the 2nd Respondent said that as the import/export manifest dated 27 June 2002 stated that the unloading place of the container was in Shenzhen, the accident might have occurred not out of and in the course of employment. There is, however, the unchallenged evidence from the Applicant before this Court that she received this phone call from the deceased in the morning of 27 June 2002 and was told that he was instructed to go to Shantou. The fact that the accident happened at this place at Shen Shan Freeway, 34 kilometres plus 900 metres en route from Shantou to Shenzhen, is consistent with the deceased’s trip to Shantou. Further, there is nothing inconsistent between the act of transferring goods from Hong Kong and loading the goods in Shenzhen first and going to Shantou later in the day.

69. I am satisfied on the facts of this case that the accident did arise out of and in the course of employment with the 1st Respondent.

Quantum

70. Applicant seeks to rely on section 11(1) of the Employees’ Compensation Ordinance on the applicable earnings where earnings are calculated based on the average over the past 12 months or the month preceding the accident.

71. Counsel for the Applicant submitted that the last recorded salary of $25,000 was the deceased’s salary, but this was clearly, according to the Applicant, salary for the month of April 2002, i.e., not for May, the month immediately preceding the accident.

72. Coming to the assessment of the average earnings for the 12 months preceding the accident, counsel for the Applicant submitted that the average income per month was $21,021.72. She derived the figure from all the deposits in the bank passbook of the previous 12 months. She asked the Court not to adopt the stance put forward by counsel for the 2nd Respondent, i.e. to disregard the cash deposit entries from unknown sources. She said in the absence of evidence that the deceased did have other source of income, this must be right. Her submission partly was based on the evidence from the Applicant that she had made contemporaneous entries in the bank passbook of the deceased as to the nature of these entries. On this point, counsel for the Applicant said had the Applicant not made the entries contemporaneously but only for the purpose of this proceedings, she would have put “恒業Tim人工 ” instead of “Tim人工” as now appeared in the copy bank passbook. The notes as they stood clearly showed they were the Applicant’s contemporaneous records.

73. She also submitted that had the cash deposits been disregarded, then the deceased would have no income for the month of December 2001, January 2002 and March 2002. This could not have been right.

74. I must say I am persuaded by counsel for the Applicant on this computation of average monthly earnings and I find the same stood at $21,021.72.

75. The deceased was aged 33 at the time of the accident. Accordingly, the Applicant is entitled to have compensation assessed at 84 months of the deceased’s average monthly salary pursuant to section 6(1)(a) or the statutory maximum, whichever is the lowest. Thus, compensation would be $1,764,000 (i.e. $21,000 x 84) plus interest.

76. Coming to funeral expenses, it is not disputed that the 1st Respondent had paid $75,000 towards this end, according to the Applicant’s evidence. Section 6(5) of ECO clearly stipulates that “where death results from the injury, reimbursement of the reasonable funeral expenses of the employee not exceeding $35,000 shall be paid by the employer to any person who has paid the expenses.”

77. It therefore follows that as the 1st Respondent had paid $75,000, she is no longer liable under the section 6(5) of the ECO to pay further sums for reimbursement of the funeral expenses.

78. Accordingly, the total compensation payable by the 1st Respondent to the Applicant shall be:

(a) the said sum of $1,764,000;

(b) interest on the said sum $1,764,000 from the date of accident to the date of judgment at half judgment rate
(i.e. $1,764,000 x 5.375% x 4
351 = $470,438.30) and
365
(c) interest on the said sum of $2,234,438.30

(i.e. $1,764,000 + $470,438.30) at judgment rate to date of satisfaction.

Apportionment

79. By the letters of renunciation the other members of the family have produced to this Court, these other members of family have waived their right to compensation.

80. The apportionment therefore will be 50% to the Applicant and 50% to the infant son, each share being $1,117,219.1.

81. Although counsel for the Applicant asked the Court to deal also with the 1st charge on legal aid, I think it is best that I leave the matter to the instructing solicitors of the Applicant.

82. I make an order that $1,117,219.1 be paid to the infant son, the same shall be paid by the 1st Respondent into court and for the other sum of $1,117,219.1, the same to be paid to the Applicant via the Applicant’s solicitors, i.e. Messrs Szwina Pang, Edward Li and Co., subject to the first charge of the Director of Legal Aid.

83. Further, although counsel for the Applicant asked that I approve the monthly sum of $6,000 to be paid out of the moneys payable to the infant out of court. In the absence of any affidavit to that effect from the Applicant, I think it is just prudent that I await the proper Order 80 application filed and supported by the affidavit of the Applicant.

84. As for costs, counsel for the Applicant asked for costs of the proceedings including all costs reserved against all Respondents, while counsel for the 2nd Respondent submitted that there should be no order as to costs. He said that the 2nd Respondent has a duty to safeguard the public fund, and in the face of the tax return of the deceased claiming to be an independant subcontractor, they had joined in.

85. There is no doubt that had the 2nd Respondent not intervened and joined as a party to these proceedings, judgment would be entered against the 1st Respondent much earlier. Whilst I am not saying that the 2nd Respondent had been unreasonable in joining as a party to oversee the interests of the public fund, I do not see why, in the circumstances, that when judgment has been entered against the 1st Respondent, that costs should not follow the event. The Applicant and the infant should not be asked to bear the costs of the proceedings subsequent to the 2nd Respondent being joined as the 2nd Respondent in the proceedings.

86. I adopt the stance of Master Lung in the case of Lau Tuen Ping v Lai Wei Kwong trading as Sun Chiu Kwong (Sheung Shui) Construction Material and Another HCPI1221/2000, judgment delivered on 15 April 2003. I therefore order that costs of the proceedings, including all costs reserved on common fund basis with certificate for counsel, be paid by the 1st Respondent to the Applicant, the same to be taxed if not agreed and that all costs of the proceedings (including all costs reserved) on common fund basis with certificate for counsel from and including 22 April 2005, be paid by the 2nd Respondent, the same again to be taxed if not agreed. Applicant’s own costs to be taxed in accordance with Legal Aid Regulations.

87. As for the costs of the apportionment hearing, the same shall be borne jointly and severally by the 1st Respondent and the 2nd Respondent on common fund basis, the same to be taxed if not agreed. Applicant’s own costs to be taxed in accordance with Legal Aid Regulations with certificate for counsel.

(K Lo)
Deputy District Judge

Ms Christina Lee, instructed by Messrs Szwina Pang, Edward Li & Co., (assigned by D.L.A) for the Applicant

1st Respondent in person, absent

Mr Edroy Chau, of Messrs Gallant Y T Ho & Co, for the 2nd Respondent

55170-EN-2006-11-24

CHAN WAI YIN v. WONG SAU PING ADA t/a EVERGREEN TRANSPORTATION CO

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54142-EN-2006-09-11

CHAN WAI YIN v. WONG SAU PING ADA AND ANOTHER

HTML content

DCEC97/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO . 97 OF 2004

------------------------

BETWEEN

	CHAN WAI YIN acting for and on behalf of herself and the eligible members of the Family of YU TAK TIM and as Personal Representative of the Estate of YU TAK TIM, Deceased	Applicant
	and
	WONG SAU PING ADA (黃秀平 ) trading as EVERGREEN TRANSPORTATION COMPANY	1^st Respondent
	EMPLOYEES COMPENSATION ASSISTANCE FUND BOARD	2^md Respondent

------------------------

Coram: H H Judge Ng in chambers (open to the public)

Date of Hearing: 6^th September 2006

Date of Decision: 6^th September 2006

Date of Handing Down Reasons for Decision: 11^th September 2006

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REASONS FOR DECISION

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1. This employees’ compensation claim started as a claim by the Applicant against the 1^st Respondent. Legal Aid Certificate was granted to the Applicant in connection with these proceedings. Notice of Issue of Legal Aid Certificate dated 17^th October 2003 was filed with the court in respect of these proceedings giving notice inter alia that the solicitor assigned to act for the aided Applicant was Mr Ng Pak Chung Alexander (“Mr Ng”) of Messrs Ng & Co (the “Firm”).

2. I was informed by Ms Chuah acting for the Director of Legal Aid that the Director had not assigned any counsel to act in these proceedings.

3. On 4^th February 2004, the Firm issued a summons on behalf of the Applicant against the 1^st Respondent for inter alia the production of the relevant insurance policy. The Firm instructed counsel (the “1^st Counsel”) to attend the hearing of the summons on 1^st March 2004 (the “1^st Hearing”) on behalf of the Applicant. At the 1^st Hearing H H Judge Lok granted the order sought by the Applicant and made an order that the Applicant’s own costs be taxed in accordance with Legal Aid Regulations.

4. At the first call-over hearing of the present proceedings on 2^nd April 2004 before me (the “2^nd Hearing”), the 1^st Respondent was absent. Counsel (the “2^nd Counsel”) was instructed by the Firm to attend the hearing on behalf of the Applicant. At the 2^nd Hearing I noted that the Applicant’s Application sent to the 1^st Respondent’s address was returned unclaimed and undelivered, which therefore raised concerns as to the viability of the Order of H H Judge Lok since service of the summons before him to the 1^st Respondent’s address might well be defective. The 2^nd Counsel informed me the Order of H H Judge Lok was not yet perfected and he sought an adjournment to look into the matter of service. I therefore ordered that the Application be adjourned sine die with liberty to restore and with costs reserved. I also granted an order for the Applicant’s own costs to be taxed in accordance with the Legal Aid Regulations.

5. Despite the aforesaid and the fact that the Application was eventually served on the 1^st Respondent only by way of substituted service, the Firm arranged for the Order of H H Judge Lok to be perfected and filed on 16^th April 2004.

6. On 20^th April 2005, the Employees’ Compensation Assistance Fund Board applied by summons to intervene in these proceedings and to join as the 2^nd Respondent. On the return day of the summons on 22^nd April 2005 (the “3^rd Hearing”), counsel (the “3^rd Counsel”) was instructed by the Firm to appear on behalf of the Applicant. I granted leave to the intervener to join as the 2^nd Respondent and to file an Answer. I also made an order for the taxation of the Applicant’s own costs in accordance with the Legal Aid Regulations in respect of the intervener’s summons. However, in respect of the Applicant’s ex-parte application for substituted service of the Application on the 1^st Respondent by way of Mr Ng’s affirmation, it was adjourned sine die with liberty to restore and with costs reserved.

7. The Firm on behalf of the Applicant subsequently arranged for substituted service of the Application. Thereafter, the Application was restored for a further directions hearing before me on 18^th August 2006 (the “4^th Hearing”). Counsel (the “4^th Counsel”) was instructed by the Firm to appear on behalf of the Applicant. The 1^st Respondent was absent and a solicitor of Messrs Gallant Y T Ho & Co appeared on behalf of the 2^nd Respondent. Various orders were made in relation to inter partes matters.

8. In the course of submissions by the 4^th Counsel, it transpired that no legal aid certificate was issued for assigning any of the 2^nd to 4^th Counsel to act in these proceedings. This was the first time the court was informed of such fact.

9. I raised with the 4^th Counsel my concerns as to whether counsel could be properly briefed to appear on behalf of the legally aided Applicant in such circumstances. I further expressed concerns over the orders for taxation of the Applicant’s own costs in accordance with Legal Aid Regulations that had already been made and over the issue of taxation of the Applicant’s own costs in respect of the 4^th Hearing.

10. The 4^th Counsel informed me the Firm had not notified the Director of Legal Aid that the 2^nd to 4^th Counsel had been instructed to appear on behalf of the Applicant at the 2^nd to 4^th Hearings, and had not sought prior approval of the Director of Legal Aid to so instruct counsel.

11. After standing down the case to enable the 4^th Counsel to take instructions, the 4^th Counsel further informed me that the Firm would not seek any reimbursement from the Director of Legal Aid for counsel’s fees and/or the Firm’s costs and disbursements in relation to instructing counsel to attend the 2^nd to 4^th Hearings. This was the first time the court was informed of an offer of waiver of legal costs by the assigned solicitor Mr Ng.

12. However, since my concerns touched on the propriety of legal representation of the legally aided Applicant as well as the question of solicitor and client costs vis-à-vis the Firm and the Director of Legal Aid, and given that the Director was unaware of the developments and unrepresented at the 4^th Hearing, I directed inter alia that the Firm do within seven days inform the Director of Legal Aid in writing of the attendance of counsel and the orders made at the 2^nd to 4^th Hearings and that the issue of taxation of the Applicant’s costs in respect of the 3^rd and 4^th Hearings, including the question of the costs of instructing counsel, be adjourned for argument. I also directed that the assigned solicitor and the Director of Legal Aid do attend the said adjourned hearing.

13. There was no reference to the 1^st Counsel and/or the 1^st Hearing at the 4^th Hearing because at that time my attention was not drawn to the fact that counsel was also briefed to attend the 1^st Hearing.

14. Pursuant to my order made at the 4^th Hearing, the Firm wrote to the Director of Legal Aid on 19^th August 2006 describing the 2^nd to 4^th Hearings and stating inter alia as follows :

(a) At all the hearings attended by counsel “owing to the inability of our Mr Ng to attend court on the respective dates” the Firm would not seek reimbursement from the Director of Legal Aid of counsel’s costs and/or the Firm’s cost in relation to instructing counsel;

(b) Mr Ng of the Firm was prevented from attending court as a result of lengthy dermatology disease and counsel was therefore retained for the various hearings.

15. At the hearing before me on 6^th September 2006 (the “Present Hearing”), Ms Chuah confirmed that the names of the 1^st to 4^th Counsel (and they are four different counsel) were not included in the panel of counsel established under section 4 of the Legal Aid Ordinance at the time of the respective 1^st to 4^th Hearings.

16. Mr Chiu, counsel for the assigned solicitor Mr Ng appearing before me at the Present Hearing, informed me that at the time when the 1^st to 4^th Counsel were instructed, the Firm had informed the 1^st to 4^th Counsel that the Applicant in these proceedings was legally aided.

17. At the commencement of the Present Hearing, I stood down the matter for Mr Chiu to consider whether there was any conflict of interest for him to act for the assigned solicitor Mr Ng in light of certain matters that I raised with him at the hearing. When the matter was restored, Mr Chiu informed me he had carefully considered his position, but did not think he was in any position of conflict and he was comfortable in continuing to represent the assigned solicitor Mr Ng. Ms Chuah took no issue on this and the hearing continued.

18. Mr Chiu reiterated that the Firm undertook not to seek reimbursement for counsel’s fees and the Firm’s costs and disbursements in instructing the 1^st to 4^th Counsel for the 1^st to 4^th Hearings from the Director of Legal Aid. Whilst such stance may practically remove concerns over expenditure by the public purse on counsel’s fees or legal costs incurred by the assigned solicitor in instructing counsel, Mr Chiu advanced a more fundamental proposition in his written and oral submissions, namely, that it is not objectionable for the assigned solicitor Mr Ng to instruct counsel as he had done in the given circumstances of these proceedings.

19. Such proposition is so startlingly contrary to common understanding that I considered it appropriate to hand down my detailed reasons for the orders I made at the Present Hearing. It is perhaps also useful to remind legal practitioners of their well-known obligations in conducting legal proceedings on behalf of aided persons.

20. In a nutshell, Mr Ng was the assigned solicitor for the legally aided Applicant. The Director of Legal Aid did not assign any counsel to act in these proceedings. Yet for four brief court hearings over a span of more than two years, ie from 1^st March 2004 to 28^th August 2006 (such hearings being the only court hearings in these proceedings), neither Mr Ng nor any other solicitor of the Firm appeared on behalf of the Applicant. Rather the 1^st to 4^th Counsel (who were not on the legal aid panel of counsel but who were informed that the lay client was legally aided) were instructed and they accepted briefs to appear on behalf of the Applicant.

21. It is against the above background that I now turn to Mr Chiu’s submissions. But before I do so, I set out below Ms Chuah’s succinct summary of the position of the Director of Legal Aid.

22. Ms Chuah submitted that the Director of Legal Aid had no statutory liability to pay the 1^st to 4^th Counsel’s fees or the legal costs incurred by the assigned solicitor Mr Ng in relation to briefing counsel because the Director did not assign any counsel to act on behalf of the aided Applicant in these proceedings. The Director of Legal Aid only knew of the instructions to counsel ex post facto and never gave any prior approval. Indeed, up to the Present Hearing, the assigned solicitor Mr Ng had not informed the Director that the 1^st Counsel had been instructed to attend the 1^st Hearing and Ms Chuah only became aware of such fact on being informed by the court. Ms Chuah informed me that given their nature the Director would not have issued any legal aid certificate for assigning counsel to attend the 1^st to 4^th Hearings.

23. Ms Chuah further informed me that under normal circumstances, if an assigned solicitor wished to instruct counsel, he or she should write to the Director of Legal Aid to seek prior approval. If approval was granted, counsel would be selected from the legal aid panel of counsel and assigned by the Director to act for the aided person in the particular proceedings. The Director of Legal Aid would then notify the court, the relevant counsel and the assigned solicitor of such assignment of counsel to act for the aided person.

24. Ms Chuah’s submissions are borne out by the provisions of the Legal Aid Ordiannce. Section 13(1) provides that where a legal aid certificate is granted, the Director of Legal Aid may assign counsel or solicitor to act for the aided person. Section 13(2) provides that counsel or solicitor selected under section 13(1) “shall be selected from the panel” (my emphasis). Section 4(1) provides that the Director of Legal Aid shall prepare and maintain separate panels of counsel and solicitors enrolled on the roll of barristers and solicitors “who are willing to investigate, report and give an opinion upon applications for the grant of legal aid and to act for aided persons” (my emphasis).

25. Plainly, counsel or solicitor acting for the aided person must be assigned by the Director of Legal Aid and must be from the legal aid panel. In briefing counsel for legally aided cases it is the duty of the assigned solicitor to ascertain that the above requirements are satisfied, yet here the 1^st to 4^th Counsel fell foul of these requirements.

26. Section 13(1) of the Legal Aid Ordinance further provides that where a legal aid certificate is granted and the Director assigns counsel, “the Director shall endorse on the legal aid certificate the name of any counsel …… assigned” (my emphasis). Section 14(1) provides that “the Director shall file the legal aid certificate in the registry of the court ……” (my emphasis). Section 14(2) provides that where counsel is assigned to act after a legal aid certificate is filed in court, or in any case where a new assignment is made in lieu of counsel assigned previously, “the Director shall not be required to endorse on the certificate the name of the counsel …… so assigned, or newly assigned as the case may be, but may, instead, give notice of such assignment or new assignment in writing to the proper officer of the court in which proceedings are pending”.

27. Again, these provisions show that counsel or new counsel is to be assigned by the Director of Legal Aid and when so assigned the court will be notified. In these proceedings, this court was not notified of any assignment of counsel by the Director of Legal Aid.

28. The close control by the Director of Legal Aid over legally aided cases can also be seen from the provisions in regulations 6A and 12 of the Legal Aid Regulations.

29. Legal aid is a creature of statute. The rights of legal practitioners to appear and act for aided persons and the rights of aided persons to have legal representatives act for them derive from and/or are limited by the Legal Aid Ordinance and its subsidiary legislation. The statutory requirements for the establishment of separate panels of counsel and solicitor and the need for the Director of Legal Aid to assign counsel and/or solicitor in legally aided cases serve a laudable purpose. They protect the proper use of public revenue and promote justice by ensuring suitable counsel and/or solicitor are assigned to act for aided persons in a cost-effective manner.

30. Assigned solicitors should be well familiar with the statutory obligations and restrictions in the conduct of proceedings on behalf of legally aided clients. Likewise, counsel in accepting briefs to act for legally aided lay clients should take care to ascertain whether they can properly appear and act for them. When there is any uncertainty, it is incumbent on either counsel or solicitor or both to seek confirmation from the Director of Legal Aid.

31. Mr Chiu in his written submissions contended that “provided that the assigned solicitor gives sufficient instruction to a counsel and on condition that the counsel fees would be borne by the solicitors’ firm, it is an accepted practice that counsel could be instructed to appear for the aided person to attend call-over hearing and the like even if the respective counsel certificate is not issued by the Legal Aid when the assigned solicitor could not attend the hearing by himself” (my emphasis).

32. At the Present Hearing, Mr Chiu at first argued that the above proposition is correct not just as a matter of practice but as a matter of law. In short, it was said that as a matter of law, even if the Director of Legal Aid had not assigned any counsel to act for the aided person in the relevant proceedings, the assigned solicitor was still entitled to brief counsel (even counsel not on the legal aid panel) provided (a) the assigned solicitor gave sufficient instructions to counsel, (b) the assigned solicitor would personally bear counsel’s fees, (c) the hearing to be attended by counsel was a “call-over hearing and the like” and (d) the assigned solicitor could not attend the hearing himself.

33. I requested assistance from Mr Chiu as to the relevant legal support for his proposition with the four provisos. Mr Chiu frankly accepted there was no provision to such effect in the Legal Aid Ordinance and he cited no other authority. I note that whilst section 16B(b), 20 and 20A of the Legal Aid Ordinance provide that counsel and solicitor acting for the aided person shall be paid by the Director of Legal Aid, there is no provision that allows the assigned solicitor to personally engage counsel and pay such counsel’s fees.

34. Mr Chiu suggested that the absence of express provision in the Legal Aid Ordinance did not mean that the proposition was not sound. Since legal aid is a creature of statute, I cannot accept such suggestion. In any event, as discussed above, there are express provisions in sections 13 and 14 of the Legal Aid Ordinance which adopted the mandatory word “shall” with no qualification in terms of the four provisos outlined by Mr Chiu or otherwise. Mr Chiu did not refer to sections 13 and 14 of the Legal Aid Ordinance at all in his submissions until I drew them to his attention. Rather he relied on regulation 17 of the Legal Aid Regulations which provides that “for the removal of doubt, it is hereby declared that where any solicitor is assigned for the purpose of any proceedings any other solicitor in the same firm may act for the aided person therein”. I am at a loss to understand the relevancy of this provision when here the assigned solicitor Mr Ng briefed counsel and not any other solicitor of the Firm to attend the 1^st to 4^th Hearings.

35. Mr Chiu also had not shown any basis for asserting the alleged “accepted practice”. It may well be that in a private non-legally aided case the lay client may entrust his solicitor to engage counsel as he deems appropriate (irrespective of whether certificate for counsel will be granted on an inter partes basis), but Mr Chiu did not explain how such “practice” in private cases could be borrowed and applied to legally aided cases given the aforesaid statutory provisions.

36. Mr Chiu’s submission is tantamount to saying that an assigned solicitor acting for an aided person on assignment by the Director of Legal Aid can on his own motion brief counsel in a manner akin to a private non-legally aided case without notifying or seeking the approval of the Director of Legal Aid. Such approach flies in the face of the aforesaid statutory provisions and puts the regime of legal representation in legal aid cases into disarray. In the end, Mr Chiu accepted that as a matter of law the assigned solicitor is required to notify and seek the prior approval of the Director of Legal Aid before briefing counsel.

37. However, Mr Chiu submitted that nevertheless as a matter of “real life” and not just legal consideration, a distinction should be drawn between call-over hearings and trials, namely, that the assigned solicitor should notify the Director for Legal Aid and/or seek his approval for briefing counsel for the purpose of trial, but it would be unnecessary to do so for the purpose of instructing counsel to attend call-over hearings. Again Mr Chiu was unable to identify any supporting provision, authority or “practice” for such distinction. The fallacy of such distinction is highlighted by the obvious lacuna of what an assigned solicitor should do in respect of the myriad types of court hearings that did not fall cleanly into the categories of call-over hearings and trials.

38. Mr Chiu argued that apart from the assigned solicitor Mr Ng, the Firm only had “a consultant working quite separately from him” and no other partner or assistant solicitor, so if Mr Ng could not attend the 1^st to 4^th Hearings (due to his lengthy dermatology disease), he could as assigned solicitor instruct counsel to appear for the aided Applicant.

39. In my view, there is no satisfactory reason before me why the consultant of the Firm, who clearly fell within the category of “any other solicitor in the same firm” under regulation 17 of the Legal Aid Regulations, could not have attended the 1^st to 4^th Hearings on behalf of the legally aided Applicant. The fact that Mr Ng chose to segregate his practice from that of the consultant is not a satisfactory reason.

40. Even more fundamentally, I cannot accept the reason offered by Mr Ng. If he suffers from a chronic illness so debilitating that he could not discharge his duty as an assigned solicitor to attend four brief hearings within a period of more than two years, and if he had no one to delegate to, he should have considered carefully whether to consult the Director of Legal Aid to assign counsel to act in these proceedings or alternatively to give up the aided Applicant’s case so that the Director can re-assign the case to another panel solicitor to handle. Mr Chiu did not suggest the need to brief counsel for the 1^st to 4^th Hearings were prompted by urgent events as opposed to Mr Ng’s lengthy illness. In any event, even if there were any urgency, the Legal Aid Ordinance contains provision for the issuance of emergency certificates, which would have enabled re-assignment of assigned solicitor or internal handling by the Director of Legal Aid’s own counsel.

41. The prime duty of any assigned solicitor or counsel is to ensure that he is fit and able to properly discharge his duties to the client and to the court and in a legally aided case to the Director of Legal Aid as well. The reason offered does not lend any strength to the suggestion that Mr Ng could on his own instruct counsel to appear on behalf of the Applicant at the 1^st to 4^th Hearings.

42. Mr Chiu acknowledged that “instruction of counsel without a counsel certificate from the Legal Aid Department is highly not commendable” (my emphasis). Mr Chiu also said it would have been better to “notify the Director of Legal Aid beforehand. By then, the Director of Legal Aid would be informed about the fact that a counsel is instructed and may make necessary records or give necessary directions to the assigned solicitor.”

43. But from the above analysis, failing to notify the Director of Legal Aid or to seek his approval before briefing counsel to attend the 1^st to 4^th Hearings is not just “highly not recommendable”, it is, in my view, not permissible under the Legal Aid Ordinance.

44. Mr Chiu had said all he could to support Mr Ng’s decision to instruct the 1^st to 4^th Counsel in the manner he did, but I cannot accept his various submissions.

45. In the circumstances, I made an order at the Present Hearing that the Applicant’s own costs of the 4^th Hearing be taxed in accordance with Legal Aid Regulations save and except that there be no order in respect of the costs of the 4^th Counsel and of the costs incurred by the Firm of and occasioned by instructing the 4^th Counsel.

46. I further directed that in respect of the orders made for the taxation of the Applicant’s own costs in respect of the 1^st to 3^rd Hearings, there shall be no order in respect of the costs of the 1^st to 3^rd Counsel and of the costs incurred by the Firm of and occasioned by instructing such counsel.

47. Since the above matters concerned the proper representation of parties, they also appear to be matters of professional conduct. I raised with Mr Chiu the issue of whether this matter should be referred to The Law Society of Hong Kong. Mr Chiu submitted that practically speaking the Director of Legal Aid and the aided Applicant were not financially prejudiced. Whilst the absence of financial prejudice is a factor to considered, the issue at heart is the matter of professional conduct. Mr Chiu then submitted there was a genuine mistaken understanding of the law, but such contention does not sit well with the bold approach adopted in his written and oral submissions made on behalf of the assigned solicitor Mr Ng.

48. However, Ms Chuah informed me that Mr Ng was still the assigned solicitor for the aided Applicant in these proceedings. In the circumstances, I did not consider it appropriate to deal with this issue at this stage. Therefore, at the Present Hearing, I directed that consideration of the issue whether instructions to 1^st to 4^th Counsel by the assigned solicitor Mr Ng to attend the 1^st to 4^th Hearings should be referred to The Law Society of Hong Kong be adjourned and restored forthwith before me by the assigned solicitor Mr Ng after the trial or final disposal of these proceedings or upon his ceasing to be the assigned solicitor for the aided Applicant, whichever is earlier.

49. Since the 1^st to 4^th Counsel are involved as well, I also directed that the 1^st to 4^th Counsel be invited to attend the said adjourned hearing to address on their own representation of the aided Applicant at the 1^st to 4^th Hearings.

50. I also granted leave for the Director of Legal Aid to attend the said adjourned hearing.

51. I further directed that there would be no order as to costs of the Present Hearing. For the avoidance of doubt, there shall be no legal aid taxation of the Applicant’s own costs.

52. Since I have dealt with the matter of the Applicant’s solicitor and client costs and the Applicant’s legal representation, it is inappropriate for me to continue to adjudicate on inter partes matters in respect of these proceedings. I have therefore directed that all further applications and/or court hearings in respect of these proceedings should not be fixed before me and that the Firm do notify the Respondents of this Order.

53. To facilitate the said adjourned hearing, I now direct that the Firm do within seven days from the date hereof forward a copy of the Reasons for Decision to each of the 1^st to 4^th Counsel.

54. The court has a serious responsibility for the administration of justice, which is a duty to itself, to the legal profession and to public community. The court places great reliance on legal practitioners, but such privilege for legal practitioners comes with the duty to act with competence, honesty and candour. The court is jealous to uphold the legal aid regime which serves an important role in the administration of justice. Practitioners should take special care in the conduct of proceedings for aided persons given public interest and public revenue considerations. The Director of Legal Aid is urged to consider whether appropriate reminder should be given to assigned solicitors and counsel.

(Marlene Ng)
District Court Judge

Representation:

Mr Victor Chiu instructed by Messrs Ng & Co for the assigned solicitor Mr Ng Pak Chung Alexander

Ms Chuah Siew Theng, Legal Aid Counsel for the Director of Legal Aid