WONG SHU KEUNG v. KAM LUEN CONSOLIDATOR LTD AND OTHERS

DCEC 638/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 638 OF 2010

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DECISION

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Introduction

1.  By my judgment delivered on 12 November 2015 (“the judgment”), I dismissed the applicant’s claim against the 1^st respondent. I also made a costs order nisi that the applicant should pay the costs of the 1^st respondent, to be taxed if not agreed.

2.  The applicant initially wrote to apply to vary the said costs order nisi.

3.  At the direction of this court, the applicant took out a summons on 1 December 2015 seeking leave to vary the said costs order nisi to the effect that the 1^st respondent should pay the applicant’s costs of this action.

Legal principles

4.  Order 62 rule 3(2) of the Rules of the District Court provides :

“(2) If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any party of the costs.”

5.  “A party seeking to displace the general rule that costs should follow the event naturally bears the burden of showing that the circumstances justify the exceptional course of such displacement” : see Mariner International Hotels Ltd v Atlas Ltd (No 2) (2007) 10 HKCFAR 246 at para 18.

6.  In considering if and how to apply the principles derived from the leading case of Re Elgindata Ltd (No 2) [1992] 1 WLR 1207, the court should always bear in mind that fairness is the touchstone. That is to say, the court must exercise the discretion to achieve a just result having regard to the overall circumstances of the case : see the Court of Appeal decision in Siu Kai Ming v Lau Sai Hing, CACV 143/2013, 21/5/2014 at para 11.

The applicant’s grounds

7.  The applicant submitted that the 1^st respondent had acted improperly or unreasonably which led to costs unnecessarily incurred.

8.  Basically, the applicant is saying that the 1^st respondent had misled the applicant into believing that it was his employer since the time the accident happened up to the filing of its Answer to the proceedings on 21 September 2010.

Discussion

9.  For the reasons stated in paras 19 to 47 of the judgment, I have no doubt that the applicant was coached to believe that he was employed by the 1^st respondent.

10.  I am satisfied that based on the information at hand before the commencement of the proceedings, the applicant should not be blamed for suing the 1^st respondent alone at the beginning.

11.  That being the case, I am satisfied that exceptional circumstances exist justifying a departure from the usual rule of costs to follow the event.

12.  Having said that, however, I am not persuaded that the 1^st respondent should be ordered to pay the applicant’s costs. After all, the 3^rd respondent is already ordered to pay the applicant’s costs of the proceedings.

13.  For the above reasons, I order that the costs order nisi is varied to the extent that there be no order as to costs between the applicant and the 1^st respondent.  I am satisfied that in doing so, a just result is achieved in the circumstances of this case.

Costs of summons

14.  The applicant is not asking for costs of this summons. Accordingly, there be no order as to costs of this application.  The applicant’s own costs shall be taxed in accordance with the Legal Aid Regulations.

DCEC 638/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 638 OF 2010

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JUDGMENT

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Introduction

1.  On 11 March 2010, the applicant was injured in the course of work. The question is who was his employer at the material time.

Procedural history

2.  Initially, only the 1^st respondent was named as the respondent. Judgment on liability was entered against the 1^st respondent on 5 October 2012.

3.  On 25 July 2013, leave was given to the 2^nd respondent to join as one of the respondents.

4.  The judgment on liability was set aside by His Honour Judge Kent Yee on 31 October 2013.

5.  On 29 November 2013, leave was given to join the 3^rd respondent in these proceedings.

6.  On 27 June 2014, leave was also given to join the 4^th respondent in these proceedings.

Applicant's case

7.  By his re-amended application, it is the applicant's case that on 11 March 2010 at around 1.30 pm when the accident occurred, he was employed by the 1^st and/or the 3^rd respondents.

8.  The applicant has lodged an appeal against the Certificate of Review of Assessment issued by the Employees' Compensation (Ordinary Assessment) Board in Form 9 dated 10 December 2012.

1^st  respondent's case

9.  By its answer dated 21 September 2010, the 1^st respondent admitted that at the time of the accident, the applicant was under its employment but did not admit that the accident arose out of and in the course of employment by the 1^st respondent.

10.  The 1^st respondent further denied the circumstances of the accident. The 1^st respondent averred that shortly after the accident, the applicant called Mr Li Ho Cheong ("Li junior"), who is the sole director of the 1^st respondent, that he had fallen from a flight of stairs and suffered injuries as a result. The applicant could not recall what exactly happened or why he fell.

11.  The 1^st respondent averred that the accident happened on the 1^st day of the employment and the applicant was on probation. After probation, the applicant would be paid $500 per day.

12.  The 1^st respondent did not appear at the trial.

2^nd respondent's case

13.  Save that it was admitted as to the time and place of the accident, the 2^nd respondent denied that at the time of the accident, the applicant was employed by the 1^st respondent nor did the accident occurred in the course of employment with the 1^st respondent.

14.  The 2^nd respondent further said that at the time of the accident, the applicant was a general worker working for the 3^rd respondent.

3^rd respondent's case

15.  The 3^rd respondent has not filed any answer nor witness statement. He did not appear at the trial.

4^th respondent’s case

16.  Save that it was admitted that the applicant was injured as a result of certain accident which occurred on 11 March 2010, the 4^th respondent did not admit any of the allegations of the applicant including the circumstances leading to his injuries, the identity of his employer or employers at the material time and whether the accident occurred in the course of his employment with any such employer or employers.

Issues

17.  The following issues are for the determination by this trial :

(1) At the time of the accident, whether the applicant was employed by the 1^st respondent;

(2) at the time of the accident, whether the applicant was employed by the 3^rd respondent;

(3) whether the injuries sustained by the applicant arose out of and in the course of the employment by the 1^st respondent and/or the 3^rd respondent;

(4) whether the determinations made by Master J Wong in the common law action entitled HCPI 686/2010 should apply in these proceedings;

(5) what is the compensation under section 9 of the Employees' Compensation Ordinance ("ECO");

(6) what is the compensation under section 10 of ECO; and

(7) what is the compensation under section 10A of ECO.

Whether the applicant was employed by the 1^st respondent at the time of the accident?

Whether the applicant was employed by the 3^rd respondent at the time of the accident?

18.  These two issues should be dealt with together.

19.  Li junior is the sole director of the 1^st respondent. He is the son of the 3^rd respondent.

20.  According to the witness statement of Li junior, the 1^st respondent carried on the business of freight forwarding. Before employing the applicant, the company only employed 1 driver and 1 clerk, Miss Mok Chui Shan ("Miss Mok"). Prior to the lunar new year falling on 14 February 2011, Miss Mok complained of having too much work. As a result, he decided to employ one extra hand to shoulder the outdoor work of Miss Mok after lunar new year.  Therefore, the applicant was employed and was to report duty on 11 March 2010 at the place of work of the respondent at Ng Chow South Road, Ping Che, New Territories, Hong Kong ("the work place").

21.  Li junior said the applicant was employed as a messenger with a daily wage of $500. On the 1^st day the applicant reported duty, he told the applicant that his duties included (but not limited to) handing over documents to lorry drivers and shipping companies. Before he left the work place, he instructed Miss Mok to arrange works for the applicant to do.

22.  Between 1 pm and 2 pm on the same day, he received a call from a driver telling him that a person was injured at the work place of the 1^st respondent. He went to the work place but did not see any injured person. There, he was informed by Miss Mok that it was the applicant who was injured. At North District Hospital, he found the applicant who told him that he got injured when falling down from the staircase.

23.  Miss Mok told Li junior that she only asked the applicant to hand over a letter to a lorry driver. She herself did not ask nor anyone with authority from the 1st respondent asked the applicant to do any welding job.

24.  At the request of the 1^st respondent, the applicant filled in the Form 2 dated 15 March 2010 with particulars and a picture, after which Li junior signed on behalf of the 1^st respondent and the same was submitted to the Labour Department.

25.  As the 1^st respondent did not appear at the trial, Li junior did not testify and therefore was not cross-examined.

26.  The applicant has given 2 witness statements.

27.  The 1^st one was dated 22 November 2010 when only the 1^st respondent was named as the respondent. In the said statement, he said he was employed by the 1st respondent from 1 January 2010 as a general labourer working at a place by the name of Wo Fung (和豐). His scope of works included welding, steel bars binding, weeding, trees planting, dismantling of structures and erecting hoardings. His boss was surnamed Li, who, according to his evidence under cross-examination, was the 3rd respondent ("Li senior"). His initial wage was $400 per day. Half a month later, it was increased to $500 per day.

28.  On 11 March 2010 at 8.00 am, Li senior drove him to Wo Fung to fetch the tools and then to an electronic components recycling yard to do welding work. Apart from Li senior and himself, a colleague nicknamed Muk Kwa (木瓜) was also working there. In the morning, Li senior instructed Li junior to remove certain concrete barrels at the site. In the afternoon when the accident happened, only Li senior and his wife were at the site. After the accident, the applicant heard Li senior told the ambulance men that the applicant fell from a staircase. At the hospital, both Li senior and Li junior were accompanying him. Li junior told the doctor that the applicant fell from a staircase.

29.  On 22 April 2010, Dr Chan Wai Kit doubted if his injuries were caused by falling from a staircase. It was then he told Dr Chan the actual cause of his injuries.

30.  His 2^nd witness statement was given on 7 March 2014 when the 2^nd and 3^rd respondents were already joined as respondents.

31.  In this statement, the applicant added that starting from 1 January 2010 up to the date of the accident, he was paid daily by Li senior in cash. Li senior, his wife and Li junior all worked at Wo Fung. All three of them gave him work instructions. Before the accident, he did not know the name of the 1^st respondent. On the day after the accident, the wife of Li senior called him and told him the name of 1^st respondent and that it was his employer.

32.  When cross-examined, the applicant said Li senior and his wife worked together, but would summon the help of Li junior occasionally.   Sometimes, Li junior would give him work instructions. He said he worked as a general labourer. He was not instructed to deliver documents nor to work as a driver. He denied that it was Li junior who interviewed him and further denied that the date of the accident was his first day of work. However, he treated Li senior as the big boss and Li junior as the little boss.

33.  To my mind, the claim of Li junior that the 1^st respondent was the employer of the applicant at the time of the accident was very doubtful.

34.  Since the date of the accident up to the time of the trial, the applicant consistently maintained that his employment commenced on 1 January 2010. This is in direct contradiction to the claim of Li junior that the date of the accident on 11 March 2010 was the applicant's first day of work.

35.  In his witness statement, Li junior said that the reason for employing the applicant was to help out the workload of Miss Mok, who was a clerk in the employ of the 1^st respondent. Li junior claimed that the applicant was employed as a messenger. His primary duty must therefore be the delivering of documents. Therefore, the applicant was supposed to be the subordinate of Miss Mok. Common sense dictates that his salary should be lower than that of Miss Mok. However, according to the certificate of insurance issued by the 2^nd respondent to the 1^st respondent, the annual salary of the outdoor clerk was reported to be $120,000 or $10,000 per month whereas in the Form 2 filed by the 1^st respondent after the accident, the salary of the applicant was said to be $500 per day or $13,000 per month. This is totally illogical. Indeed, messengers, like those white collar employees, are normally paid monthly. In Hong Kong, daily wage is the common mode of wage calculation for workers in the construction industry. In my view, the likelihood that the applicant was employed as a general labourer is higher than that he was employed as a messenger.

36.  On the other hand, it seems to me that that evidence of the applicant is more plausible.

37.  Although initially he told a false reason for his injury of falling from a staircase. He had soon related to the actual cause of the accident. In a record of interview dated 20 April 2010 given to the Labour Department, he explained that when he was waiting for the ambulance, Li senior told all people at the scene (the wife of Li senior, Muk Kwa and himself) that they should say that he fell down from a staircase of the container and that it was his 1^st day of work. As he was receiving comprehensive social assistance, he was not supposed to work. Therefore, when he was asked by an occupational safety officer on 12 March, he told him the version that was instructed by Li senior. However, he was required by the Social Welfare Department ("the Department") to report regularly if he was doing any job. He was due to report to the Department on 12 March. He felt that he could no longer tell the lie. Therefore, he told his case officer the truth in the afternoon of that day and later on 29 March told the occupational safety officer of the Labour Department the truth at Tai Po Hospital.

38.  In addition to that, the applicant had also reported the matter to the police on 13 April 2010. To that end, he gave a witness statement to the police on 12 January 2011 in which, among other things, he stated the cause of the accident along the line of his record of interview to the Labour Department.

39.  The applicant was a general labourer by occupation. Manual power was his tool of trade. In doing his job, he must be used to taking orders from those superior in position. According to his evidence, it was Li senior who interviewed him and gave him work instructions. He considered Li senior as his big boss. That being the case, I tend to believe that he is susceptible to the influence of Li senior. At the time when the ambulance arrived, he must be in a state of shock and in pain. In such situation, I am not surprised that he told the ambulance men the version as directed by Li senior. In any event, the applicant had quickly made a clean breast of it on the next day. In my view, the version that he gave to the Labour Department, the Social Welfare Department and the police is the truth of the matter.

40.  I find that the applicant was employed by Li senior (ie the 3^rd respondent) as a general labourer, His employment commenced on 1 January 2010. In this regard, I reject the evidence of Li junior.

41.  It is the applicant's belief that he was employed by the 1^st respondent.

42.  Who was the employer of the applicant at the time of the accident is one of the issues which this court has to decide. In doing so, this court will need to consider all the relevant evidence. In the process, the subjective view of the applicant is not a determining factor.

43.  In my judgment, the belief of the applicant is misplaced.

44.  According to his evidence, since the commencement of his employment, he was paid daily in cash by Li senior. The 1^st respondent only paid him the periodical payments after the accident. The applicant did not know of the name of the 1st respondent until after the accident. He was only told that his employer was the 1^st respondent by the wife of Li senior after the accident. Before the accident, it was Li senior who gave him work instructions. Li junior only assisted the work of Li senior when called upon to do so. He treated Li senior as his big boss. But as Li junior was the son of Li senior, he would also listen to the instructions of Li junior and considered him as the little boss. On the day of the accident, he was driven by Li senior to work at the recycling yard.

45.  In my judgment, the evidence shows that the 1^st respondent only came into the picture after the accident, probably because it had taken out insurance coverage. I believe that that was the reason why the applicant was told that his employer was the 1^st respondent after the accident.

46.  Clearly, since 1 January 2010, the applicant worked under the instructions of Li senior. Even on the day of the accident, he was driven to the recycling yard by Li senior to work there. Li junior was not in charge of the works, but was only asked by Li senior to help removing some concrete barrels at the site in the morning.

47.  For the above reasons, I find as a fact that the 3^rd respondent was the employer of the applicant from 1 January 2010 up to the time of the accident. The 1^st respondent was not the employer of the applicant.

Whether the injuries sustained by the applicant arose out of and in the course of the employment by the 1^st respondent and/or the 3^rd respondent?

48.  In the light of my findings at paragraphs 40 and 47 hereof, I have no doubt that the accident whereby the applicant was injured arose out of and in the course of the employment by the 3^rd respondent.

Whether the determinations of Master J Wong in the common law action entitled HCPI 686/2010 should apply in these proceedings?

49.  Master J Wong in the applicant's common law action against the 1^st respondent under HCPI 686/2010 (in which the 2^nd respondent was given leave to join as the 2^nd defendant) assessed the damages of the applicant. In the Assessment of Damages dated 6 May 2013, the learned Master made the following determinations which have relevance to the present proceedings :

(1) the pre-accident earnings of the applicant was $13,000 per month ($500 x 26days);

(2) the daily wages of the applicant would rise to $600 due to inflation;

(3) the sick leave period of the applicant is 37 months; and

(4) the applicant would be able to take up jobs with light duties such as a security guard earning about $8,899 per month.

50.  The question of issue estoppel was considered  by Cheung J (as he then was) in Wong Wang Sum v Lee Kam Engineering Co (a firm) & Anor [1996] 3 HKC 627. His Lordship followed the House of Lords decision in Arnold v National Westminster Bank plc [1991]  2 AC 93 which held that although issue estoppel constituted a complete bar to relitigation between the same parties of a decided point, its operation could be prevented in special circumstances, for instances, where further material became available which was relevant to the correct determination of a point involved in earlier proceedings but could not, by reasonable diligence, have been brought forward in those proceedings.

51.  In the present case, there is no special circumstance whatsoever to prevent the operation of the doctrine.

52.  At the hearing of the assessment of damages in HCPI 686/2010, the 2^nd respondent was a party to the proceedings. The 2^nd respondent had the opportunity of cross-examining the applicant and to put forward its argument before the learned Master.

53.  For the purpose of these proceedings, both the 2^nd and 4^th respondents did not take the position that the doctrine should not operate[1].

54.  In the circumstances, I see no reason that the determinations of the learned Master should be relitigated and decided afresh.

What is the compensation under s9 of ECO?

55.  By a Certificate of Review of Assessment in Form 9 dated 10 December 2012 ("Form 9"), the Employees' Compensation (Ordinary Assessment) Board reviewed its original assessment in Form 7 and re-assessed the loss of earning capacity of the applicant at 6%. The applicant appealed against the said assessment on 28 January 2013 pursuant to s18(1) of ECO.

56.  This court is therefore required to start afresh, relying not only on the certificate of the Board but also on any other evidence, especially medical evidence, adduced before it, to assess the loss of earning capacity permanently caused by the injury suffered in an accident at work: see Chu Chin Yiau v Ray On Construction Co Ltd [1992] 1 HKC 246 applying Chan Kit v Sum Wo Industrial Manufactory [1989] 2 HKLR 230.

57.  According to the Form 9, the injuries sustained by the applicant were :

"Multiple injuries resulting in (i) headache; (ii) fracture of right hip with right hip pain and stiff; (iii) dislocation of left hip with left hip pain"

58.  I think there is no dispute that those injuries were non-scheduled injuries.

59.  For non-scheduled injuries, s9(1)(b) of ECO and the provisos thereof are relevant :

"(b) in the case of an injury not specified in the First Schedule, such percentage of the compensation which would have been payable in the case of permanent total incapacity as is proportionate to the loss of earning capacity permanently caused by the injury in any employment which the employee was capable of undertaking at that time:

Provided that –

...

(ii)  in the case of injury not specified in the First Schedule, the loss of earning capacity permanently caused by such injury shall be assessed as a percentage having regard so far as possible to the scale of percentages specified in that Schedule and to the Note thereto."

60.  Mr Meyrick Wong, counsel for the applicant, urged upon this court to apply the Paper Mills Formula and sought to argue that the applicant has suffered a loss of earning capacity of 43%. The said percentage was arrived at based on the findings of Master J Wong that but for the accident, the daily wages of the applicant would rise to $600 and after the accident, the applicant would be able to take up jobs with light duties such as security guard with a monthly earning of $8,899. Mr Wong calculated the loss of earning capacity according to the Paper Mills Formula (as rectified by Lui Kwong Yan v Shui Hing Decoration Works [1993] 1 HKLR168) as follows :

($600 x 26 days)- $8,899/$600 x 26 days = 42.9%

61.  With respect, the submission of Mr Wong has over-simplified the application of the formula. Furthermore, the adoption of the daily wage of $600 was not in accordance with s9(1)(b) in that the relevant time should be at the time of the accident rather than thereafter : see also the formula in Hong Kong Paper Mills (supra) at p560A and the application of the rectified formula in Lui Kwong Yan (supra).

62.  When Sir Alan Huggins, VP formulated the formula in Hong Kong Paper Mills Ltd v Chan Hin Wu [1981] HKLR 556, His Lordship was mindful of the proviso under the then s9(1)(b)(ii). The proviso had since been amended to the present form. The effect of the amendment was "a clear direction that the percentage payable for the nearest relevant injury in the schedule should not have the same importance in the assessment calculation as before": see Lui Kwong Yan (supra) at p172.

63.  That said, in considering the loss of earning capacity under s9(1)(b), regard must be given to the proviso under s9(1)(b)(ii).

64.  Turning to the medical evidence, the applicant has produced the medical reports of Dr Jack Wong, Dr Brian Choa and Dr Raymond Chow.

Dr Jack Wong

65.  Dr Wong examined the applicant on 11 November 2011. He opined that the applicant sustained the following injuries :

(a) trochanteric fracture of right femur;

(b) dislocation of left hip;

(c) fracture left zygoma; and

(d) abrasion over left side of face, right shin and left knee.

66.  Dr Wong was of the view that the applicant would not be able to resume his pre-accident occupation as a welding worker which demands prolonged weight bearing and squatting, lifting and carrying. However, he would be suitable for sedentary occupations such as cashier or theatre ticketing staff.

67.  Dr Wong used the 6^th edition of the Guides to the Evaluation of Permanent Impairment published by the American Medical Association ("the Guides") as a reference for the assessment of the applicant's permanent disability. Accordingly, Dr Wong assessed that the applicant has the following impairments :

(a) dislocation of left hip joint without avascular necrosis: 10% lower extremity impairment ("LEI"); if vascular necrosis occurs: 16% LEI; and

(b) trochanteric fracture of right femur with moderate motion deficit and mal-alignment: 16% LEI.

68.  The combined LEI is 24% (29% if avascular necrosis occurs), which is equivalent to 10% whole person impairment (12% if avascular necrosis occurs).

69.  Finally, Dr Wong assessed that the applicant has suffered 20% loss of earning capacity (23% if avascular necrosis occurs).

70.  Dr Wong said avascular necrosis of left femoral head may occur within 5 years after joint dislocation. The applicant is advised to follow up with regular x-ray to monitor the condition.

Dr Brian Choa

71.  Dr Choa examined the applicant on 19 April 2012. Dr Chao opined that there is no cure to the applicant's complaint of post-traumatic headache but this would improve gradually with time. Due to the headache, Dr Chao assessed that the applicant has suffered 1% permanent impairment of the whole person. As such headache was of sufficient severity to last for hours which disturbed his sleep, the applicant might be required to take days off occasionally. Dr Chao assessed that the loss of earning capacity is 2%.

Dr Raymond Chow

72.  Dr Chow examined the applicant on 18 April 2012. Dr Chow opined that the left zygomatic arch fracture had healed satisfactory without visible deformity of the malar region and no neurosensory deficit over the left infra-orbital area.  From oral and maxillofacial point of view, there is no loss of earning capacity and the whole person impairment is 0%.

73.  Item 32 of the First Schedule of ECO provided that the percentage of loss of earning capacity for ankylosis of hip joint in optimum position is 35%. Indeed, the applicant is not suffering from ankylosis of hip joint. In respect of the injuries to his hip, the loss of earning capacity arising therefrom should in my view be at a percentage lower than 35%.

74.  Dr Wong firstly assessed the whole person impairment by reference to the Guides and then proceeded to assess the loss of earning capacity of the applicant. He was in the best position to make the assessment. I see no reason to differ from his assessment.

75.  In fact, no attempt was made by Mr Samuel Chan, counsel for the 2nd respondent and Miss Julia Lau, counsel for the 4th respondent, to challenge Dr Wong's assessment. Mr Chan expressly accepted Dr Wong's assessment of 20% loss of earning capacity.

76.  Counsel for the 2nd and 4th respondents urged upon this court to adopt the figure of 20% as the applicant's loss of earning capacity.

77.  In the closing submission of Mr Chan, no mention was made about the assessment of 2% loss of earning capacity by Dr Choa.

78.  In her closing submission, Miss Lau submitted that the assessment of Dr Choa "should be combined with the figures offered by the other experts".  Although the sentence was that used by Dr Choa in his report, the exact meaning is unclear. Miss Lau did not provide any authorities for such proposition. If by that she meant that Dr Choa's assessment should merge into the assessment of Dr Wong so that the overall assessment should become 20%, I am unable to accept such submission.

79.  Dr Choa assessed the applicant's loss of earning capacity on account of his post-traumatic headache at 2%. I see no reason that Dr Choa's assessment should be ignored.

80.  S9(2) of ECO provides that :

"(2)  Where more injuries than one are caused by the same accident, the amount of compensation payable under the provisions of this section shall be aggregated, but not so in any case as to exceed the amount which would have been payable if permanent total incapacity had resulted from the injuries."

81.  Hence, the law is clear that the assessments of loss of earning capacity which arose out of different injuries from the same accident should be added together so long that the total amount of compensation does not exceed the amount payable in the case of permanent total incapacity.

82.  For the above reasons, I am of the view that a 22% loss of earning capacity is appropriate.

83.  The applicant was aged 49 at the time of the accident. Under s7(1)(b) of ECO, the multiplier to be adopted is 72.

84.  Accordingly, the compensation payable under s9 is :

     $13,000 x 72 x 22% = $205,920

What is the compensation under s10 of ECO?

85.  Master J Wong determined that the sick leave period of the applicant was 37 months.

86.  In accordance with s10(5) of ECO, the compensation payable under s10 is :

$13,000 x 36 x 4/5 = $374,400

What is the compensationunder s10A of ECO?

87.  The applicant has incurred medical expenses in the sum of $9,738.30 which is not disputed by the 2^nd and the 4^th respondents and I so allow.

Advanced payment

88.  It is not in dispute that the applicant has received advanced payment in the sum of $263,500.

Conclusion and order

89.  For the foregoing reasons, I order that the 3^rd respondent shall pay the applicant compensation in the sum of $326,558.30, which is made up of the following sums :

(1) s9 compensation	$205,920.00
(2) s10 compensation	$374,400.00
(3) s10A compensation	$ 9,738.30
Sub-total :	$590,058.30
LESS : advanced payment	$263,500.00
Compensation payable :	$326,558.30

90.  The applicant's claim against the 1st respondent is dismissed.

Interest

91.  The applicant is entitled to interest at half judgment rate from the date of the accident (ie 11 March 2010) to the date of judgment and thereafter at judgment rate until the date of payment.

Costs

92.  As between the applicant and the 1^st and 3^rd respondents, costs should follow the event. I make an order nisi that :

(1) the applicant shall pay the costs of the 1^st respondent, to be taxed if not agreed; and

(2) the 3^rd respondent shall pay the costs of the applicant (including costs reserved) with certificate for counsel, to be taxed if not agreed.

93.  In respect of the costs of the 2^nd and 4^th respondents, I make an order nisi that there be no order as to costs.

94.  The applicant's own costs shall be taxed in accordance with Legal Aid Regulations.

95.  In the absence of any application to vary the same within 14 days from the date of this judgment, the orders nisi shall become absolute.

Mr Wong Wing Keung Meyrick, instructed by Yu Sun Yau Mak & Lawyers, for the applicant

The 1^st respondent was not represented and did not appear

Mr Samuel Chan, instructed by Munros, for the 2^nd respondent

The 3^rd respondent was not represented and did not appear

Miss Julia Lau, instructed by Galant Y T Ho & Co, for the 4^th respondent

[1] Mr Samuel Chan, counsel for the 2^nd respondent, in his closing submission made submission on issue estoppel on liability only. It seems the submission was made out of caution as it is not the position of Mr Meyrick Wong, counsel for the applicant, that the doctrine applies to the trial on liability. 

DCEC 638/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE No. 638 OF 2010

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DECISION

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Introduction

1.  This is an application of MSIG Insurance (Hong Kong) Limited (“MSIG”) by summons dated 1 August 2013 (“the Summons”) for an order that the consent order dated 5 October 2012 whereby judgment on liability (“the Judgment”) was entered in favour of Mr Wong Shu Keung (“Wong”) against Kam Luen Consolidator Limited (“Kam Luen”) be set aside. Wong opposes this application.

2.  Kam Luen has acted in person by its director Mr Li Ho Cheong (“Li Junior”) since 11 March 2011. Li confirmed to this court that Kam Luen still insists on the validity of the Judgment and would solely rely on the submissions advanced by Mr Sun, appearing for Wong, to oppose MSIG’s application.

Background Facts  

3.  To deal with this application, it is necessary to go into some detail the background facts.

4.  On 25 June 2009, MSIG issued an employees’ compensation policy to Kam Luen covering the period from 25 June 2009 to 24 June 2010 (“the Policy”). It was stated in the Policy that the nature of Kam Luen was transportation with three employees being a tractor driver, a lorry driver and an outdoor clerk.

5.  Wong was allegedly injured in an accident taking place on 11 March 2010 (“the Accident”). The first documentary evidence relating to the Accident is a Form 2 dated 15 March 2010 filled by Wong. Wong stated in Form 2 that his then employer at the time of the Accident was Kam Luen. The insurer of Kam Luen was stated to be MSIG. He further alleged that he fell from a ladder when he was tidying up things for Kam Luen. As a result, he sustained multiple injuries.

6.  Wong altogether attended three interviews with the Labour Department. In an interview record dated 20 April 2010 compiled by one Mr Lam, occupational safety officer of the Labour Department, Wong disclosed that he was employed by Kam Luen as a general labourer starting from 1 January 2010 and his workplace was a deserted farm which was commonly known as Wo Fung. He undertook demolition and construction works at Wo Fung. At the time of the Accident, he was doing welding work as instructed by one Mr Li (“Li Senior”) and a container fell upon him. Wong was injured as a result. This was a totally different account of the Accident.

7.  In the same interview, Wong also disclosed that he was advised by Li Senior to lie about the true account of the Accident so as to avoid any trouble arising from the fact that he both worked and received Comprehensive Social Assistance at the same time.

8.  In the subsequent interviews on 29 April 2010 and 14 June 2010, Wong maintained the same account of the Accident and he said more about his employment. He contended that he did not know Kam Luen until the Accident and all along he received instructions from Li Senior and his wife, parents of Li Junior, was the sole shareholder of Kam Luen. He was paid in cash by Li Senior and his wife. It was only after the Accident that Li Senior told Wong that he should say that Kam Luen was his employer instead.

9.  Prior to his Employees’ Compensation claim made on 9 June 2010, Wong commenced a personal injuries action against Kam Luen in the High Court under HCPI 686/2010 (“the High Court Action”). Judgment on liability against Kam Luen was entered upon admission by Kam Luen by an order dated 8 September 2011. MSIG was so informed on 23 September 2011.

10.  It should be noted that the Judgment in the Application was entered on 5 October 2012 when Kam Luen appeared in person by Li  Junior before His Honour Judge Poon.

11.  Next came the hearing of assessment of damages on 10 April 2013 before Master J Wong. From the judgment of the learned master dated 6 May 2013, it can be seen that one week before the said hearing, MSIG made a late application to join as a second defendant of the High Court Action. The joinder application was heard by the learned master on the same occasion as a preliminary issue. MSIG’s legal representatives indicated to the learned master that MSIG had in fact repudiated the Policy. Wong was represented and opposed the joinder application whilst Kam Luen, legally represented, did not. In the end, the learned master allowed MSIG to be joined as the 2^nd defendant of the High Court Action.

12.  MSIG heavily relies on a document emanated from the High Court Action for this application. It is the written submission of Kam Luen filed on its behalf by its former solicitors Messrs David Ravenscroft & Co. dated 12 April 2013 (“the Written Submission”). In paragraphs 5 to 8, it was submitted that Wong was engaged by Kam Luen as a messenger only and welding job was outside the ambit of his employment with Kam Luen. It was pointed out that Wong’s own evidence was that he was asked by Li Senior to do the welding work and Li Senior was his employer and not Kam Luen nor Li Junior.

13.  It was further stated in the Written Submission that Wong was in fact was on the one hand employed by Li Senior personally to do the welding work at the workplace and at the same time employed by Kam Luen as a messenger. The Accident hence took place not in the course of Wong’s employment with Kam Luen but his another employment with Li Senior Li.

14.  Mr Reeves, appearing for MSIG, submits that such submissions prompted MSIG to review its position in the Application in the light of all the evidence filed in both the High Court Action and the Application. Subsequently, MSIG applied to join as the 2^nd respondent in the Application by summons dated 2 July 2013. In the supporting affidavit, it was made clear that the joinder was applied for with a view to defending the Action. Deputy District Judge Eric Tam granted the joinder application on 25 July 2013. Then came the Summons.

Principles

15.  Mr Sun, appearing for Wong, argues that MSIG has to show a defence with more than a real prospect of success in order to have the Judgment set aside. He submits that he is unable to find an authority with facts akin to the present situation and since the Judgment was entered by admission, the threshold should be higher than those of setting aside a default judgment.

16.  On the other hand, Mr Reeves relies on Wong Kam Fai v Yu Sai Wan trading as Wong Fai Construction Material Co & Ors, unreported, DCEC 91/1992, 13.1.1993 and Chan Ka Ki, suing by her mother and next friend HAU Kwai Yung Grandy v Lau Sin Ting and Anor., unreported, HCPI 900/2011, 19.11.2012 to show that this court has jurisdiction to allow the newly joined party to challenge liability of the employer even after judgment has been entered against the employer. In the former case, P. Cheung, J (as he then was) reviewed sections 43 and 44 of the Employees’ Compensation Ordinance, Cap. 282 and in the end, the learned judge allowed the insurer to apply to set aside a default judgment entered before the joinder.

17.  In my view, I do have jurisdiction to set aside the Judgment and MSIG has to convince me that it has a reasonable defence to Wong’s claim. I do not accept that MSIG has a higher burden because of the consent nature of the Judgment. The consent was given by Kam Luen and not MSIG.

18.  In passing, I should indicate my agreement with the observation of Bharwaney J in the case of Chan Ka Ki, supra. I agree that it is indeed good practice for the court allowing the joinder of an insurer to expressly spell out that the joinder is for participation on either some, or all, issues of liability and quantum. If this had been done in the present case, this application might have been avoided.

Discussion

19.  To me, the overriding concern is the merit of the defence of MSIG. I need little persuasion that it has a meritorious defence for the following reasons and in the interest of justice, in my view, MSIG should be given a chance to challenge the claim of Wong.

20.  The Written Submission indeed amounts to an unequivocal denial of an employer and employee relationship between Wong and Kam Luen at the time of the Accident, which is the very basis of the claim of Wong in the Application. This denial cannot sit comfortably with its prior consent to the Judgment in this Application. It is inexplicable why Kam Luen has consented to the Judgment despite its then lack of legal representation given its position shown in the Written Submission. Li Junior should not have accepted liability in the Application on the one hand and denied the employment in the High Court Action one the other.

21.  Mr Sun criticizes the defence of MSIG being solely dependent on evidence of other parties adduced in the proceedings and MSIG has no independent evidence to offer. I am yet to see the evidence of MSIG in the Application and I do not know whether there would be independent evidence to be filed. However, be that as it may, it does not necessarily mean that MSIG does not stand a good chance to disprove the alleged employment on the evidence adduced by Wong and Kam Luen. Whilst I do not propose to embark on a close scrutiny of all the documentary evidence adduced thus far, I observe that Wong would have a lot of questions to answer before he can establish his claim.

22.  Mr Sun further complains about the lateness of this application to set aside the Judgment, which was entered more than nine months before MSIG makes this application. Mr Sum points out there are ample documentary evidence to show that Wong was injured when doing welding work right after the Accident. He contends that if MSIG disputes liability of Kam Luen by reason of the fact that Wong was acting outside the employment with Kam Luen, MSIG should have acted promptly and not allowed the Judgment be entered by consent.   

23.  Mr Reeves first explains that MSIG has left the defence work to Kam Luen’s then solicitors in the belief that the interest of Kam Luen would be properly taken care of. He contends that it was possible that Wong was indeed doing welding work for Kam Luen though it was not within the ordinary business of Kam Luen. All along Wong alleges and Kam Luen accepts that Wong was injured in the course of his employment with Kam Luen. As a result, MSIG was misled. It was not until the clear denial was made in the Written Submission that MSIG could probably be alive to the fact that Wong was employed by another entity altogether.  

24.  The Written Submission was apparently based on the evidence filed in the High Court Action including the witness statement of Wong. I am not in a position to assess the evidence in the High Court Action and indeed I have no access to most of such evidence. Mr Reeves submits that Wong’s alternative employment with Li Senior personally was disclosed for the first time in the Written Submission and I have no reason to disbelieve him.

25.  Mr Sun seeks to water down the damaging effect of the denial of the employment relationship in the Written Submission and submits that it was made without evidential basis. I cannot readily accept this submission. In any event, given this sudden chance of position of Kam Luen, the consent underlying the Judgment is questionable. Further investigation is warranted and the merit of the claim of Wong should call for proper adjudication.

26.  In the premises, whilst I accept that MSIG could have acted more promptly, I do not think the delay is so serious that MSIG should be shut out and be deprived of a chance to challenge the claim of Wong altogether given the obvious merit of its defence.

Conclusions and Orders

27.  For the reasons given above, I believe that I should exercise my discretion to set aside the Judgment and allow MSIG to challenge both liability and quantum of Wong’s claim in this Application. I therefore accede to the application of MSIG and make an order in terms of paragraphs 1 and 2 of the Summons.

28.  In the Summons, MSIG asks for an order that MSIG do pay the costs of this application. I accordingly make a costs order nisi that MSIG do pay Wong costs of this application in any event, to be taxed if not agreed. There should be no order as to costs in regard to Kam Luen and I allow Wong’s own costs to be taxed in accordance with the Legal Aid Regulations.

29.  Lastly, the parties are directed to fix a date for a direction hearing within 28 days hereof.

DCEC638/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 638 OF 2010

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BETWEEN

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D E C I S I O N

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1.  In this application the solicitors for the Applicant seek to adjourn the proceedings sine die with liberty to either party to restore.

2.  The application, which might be seen as slightly unusual, has been made because the Applicant has suffered serious injuries and, so I am told, remains on sick leave until 31 August 2011. 

3.  The Applicant’s solicitors wish to adjourn the preparation and exchange of joint expert medical reports until then so that progress, if any, between now and then can be taken into account, in particular to see if injuries suffered by the Applicant have become permanent.

4.  Directions in this application have been previously made and the next step, so I am told, would be that of a joint expert medical report.

5.  I am not prepared to grant orders in terms of the Applicant’s summons.  Instead, I would consider it more appropriate to make directions in line with those made by Master Marlene Ng in the related personal injuries action in HCPI686/2010, in which Master Ng has been informed, so I am told, of the Applicant’s sick leave until 31 August 2010.

6.  The orders which I will therefore make are as follows. 

(1)   The Applicant do serve his supplemental list of documents disclosing up-dated medical notes, records and reports from the Plaintiff’s treatments, hospitals, clinics and doctors on or before 4 August 2011 and there be an inspection of documents within 7 days thereafter.

(2)   This matter  be re-listed on or before 31 August 2011 for directions to be made as to medical expert evidence. 

(3)   The solicitors for the Applicant shall send a copy of this order to the Legal Aid Counsel in charge of this application.

(4)   The costs of this summons be costs in the cause and the Applicant’s own costs be taxed in accordance with Legal Aid regulations. 

(5)   Time shall run during the court vacation.

(6)   There be liberty to apply.

(7)   An order be drawn up by the Applicant’s solicitors with a draft order submitted for approval within 5 days of today. 

(8)   The Applicant do, within 5 days of sealing this order, serve a sealed copy of the order on the defendant in HCPI686 of 2010 for his information and submit a sealed copy of this order to the Personal Injuries Master in HCPI686 of 2010 for her consideration and, where appropriate, direction.

Representation:

Mr Michael Sun,  of  Huen & Partners, for the Applicant

 Respondent in person, represented by Mr Li Ho Cheong