HONG CHUN TAK v. YIP KAN KEE CONTRACTING CO LTD AND OTHERS

DCEC 849/2017

[2021] HKDC 600

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 849 OF 2017

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IN THE MATTER OF AN APPLICATION BETWEEN

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DECISION

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1.  In this Decision, I will continue to adopt the abbreviations used in my judgment herein handed down on 24 March 2021 (“the Judgment”).

2.  In the Judgment, I held against R2 in the only issue on liability at trial, namely that R2 was the principal contractor within s24 of the ECO. Following from that I held that R2 was liable severally with R1, the employer, for payment of employees’ compensation to the AP, which in the Judgment I awarded at the total sum of HK$646,575 with interest.

3.  In paragraph 74 of the Judgment, I made a costs order nisi.  Since then, the AP and the Board have applied for certain variations.  The variations sought by the AP have been resolved.  What remains outstanding is the application to vary by the Board.

4.  At the time, I took the provisional view that the starting point in respect of the Board’s costs was no order as to costs and that it might be harsh for R2 to bear 2 sets of costs in conducting the same defence case, and in the Judgment I ordered on a nisi basis that there be no order as to the Board’s costs.

5.  The Board accepts that there should be no orders as to its costs against the AP and R1, but seeks an order that “R2 pays the Board’s costs in this action, with certificate for counsel, to be taxed if not agreed”.  It seems clear that by the said proposed order, the Board is now seeking against R2 costs it has incurred since its joinder on 15 May 2020.

6.  Pursuant to my directions, R3 and R2 have respectfully filed their submissions.  I have also directed that this matter would be disposed of on papers.  This I now do.

7.  R2, now acting in person, said that the costs order nisi was reasonable and correct and further pleaded that he had already incurred substantial legal costs and that the payment of the compensation of HK$646,575 was already a heavy burden on him.

8.  In its written submissions, the Board first argued that the starting point regarding the Board’s costs in this case should be the usual rule of “following the event” and not “no order as to costs”.  It submitted extensively that what Ribeiro PJ held in  Wo Chun Wah v Employees Compensation Assistance Fund Board (2019) 22 HKCFAR 495 in paragraph 46 at p 515, namely

“… where the Board has been joined as a party and properly carries out its “filtering” or monitoring functions, the appropriate starting point should generally be no order as to costs …”

was held in relation to Question 1 before the Court of Final Appeal, namely

“Question 1

Whether, upon proper construction of the provisions of the [ECAO], and in particular s.20B(3) thereof, the court has jurisdiction to order costs against the Board in common law damages claims to which the Board joins in pursuant to s.25A of the ECAO (“Joinder Cases”), and if so, whether there is a “usual order” or “starting point” on costs to be made or ordered in Joinder Cases where the Board (i) disputes liability and quantum, and (ii) disputes quantum only (See [Court of Appeal] Judgment §§14, 20, 32 and 34).”

and was held also in relation to costs sought by the applicant/plaintiff to be paid by the Board.

9.  It is submitted that, quite different from the usual cases where the Board’s stance would be opposite to that of the applicants’, the Board in this case shared the same stance with the AP against R2 in relation to the only issue the Board was given leave to be joined, namely, whether R2 was the principal contractor.  The Board said essentially that therefore what Ribeiro PJ said in paragraph 46 of that judgment (quoted above) is not quite applicable or apposite.

10.  In view of the fact that this court does not have the benefit of argument from R2, and particularly that I find myself persuaded by the Board’s further submissions that there are good reasons here to exercise my discretion to order R2 to pay its costs even if the starting point were “no order as to costs”, I find it not necessary to come to a view as to whether “no order as to costs” should be a general starting point in all employees’ compensation cases where the Board seeks to and is allowed to be joined as a party.

11.  I am persuaded by the following matters put forth by the Board concerning R2’s conduct in this action such that, even if “no order” were the starting point, I should exercise my discretion to order R2 to pay the Board’s costs:-

(a) R2 must have known that he needed to take out, or to ensure that R1 had taken out, a valid policy of insurance for the AP, and that failing which the Board might very well be called upon to pay the compensation to AP in R2’s stead. 

(b) To avoid liability to pay the employees’ compensation to the AP, R2 had been strenuously opposed, based on grounds that the courts have found to be unmeritorious, the application by the AP to join him as R2 and the joinder of the Board.

(c) Yet, his case was based on, what the court now has found, as stories made up by him and continued to be made by him during trial.

(d) By this court’s order made on 15 May 2020, this court held that it was appropriate to let the Board join to properly present the case against R2.

(e) The witness statement of Yip proffered by the Board was clear and detailed regarding the relevant facts.  R2 instead of responding to them directly, chose to file 2 supplemental witness statements, which merely denied barely what Yip said, but brought out other matters as excuses, which the court found as essentially lies.  Further time and costs were thereby spent.

(f) The court found the witness called by the Board, namely Yip, honest and reliable.

(g) After the Board was joined and faced with the witness statement of Yip, R2 continued with his lies and compounded them with the further lies and excuses. This court rejected his testimony as lies and came to a clear view that R2 was an unreliable and incredible witness.

12.  In a nutshell, the picture is that in order to avoid paying the compensation (unmeritorious, I would add) and with the potential liability to pay the Board’s costs in view, R2 continued to gamble (and lie) that he might be able to get away without being found liable; and now having been adjudged liable, he should be met with the consequences of that gamble.

13.  The Board reminded this court that it has found the Board’s conduct at trial proper and reasonable and that it has been ably assisted by its participation.  In the circumstances, I think it is fair and reasonable that the Board should be able to recoup its costs from R2.

14.  In the premises, I am satisfied that R2 should pay the Board its costs of this action incurred since its joinder, including the costs of this application, with certificate for counsel, to be taxed if not agreed.  I would vary my costs order nisi accordingly.

15.  My clerk will arrange this Decision to be interpreted to R2 in Punti should the need arise.

Lau & Chan, assigned by the Director of Legal Aid, for the applicant and did not lodge any written submissions

The 1^st respondent was not represented and did not lodge any written submissions

The 2^nd respondent was not represented

Mr Gary KH Chung, instructed by Cheng, Yeung & Co, for the 3^rd respondent

DCEC 849/2017

[2021] HKDC 352

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 849 OF 2017

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JUDGMENT

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1.  The applicant (“AP”) suffered an injury at work on 23 September 2015 when he was employed by the 1^st respondent (“R1”) to perform renovation work in a small village house located in Tsz Tong Tsuen, DD 83, Fanling, New Territories (“the Property”) owned by Madam Wat Yee Wai (“Wat”).

2.  At the time, the AP was using a pair of metal cutting scissors to cut a piece of metal frame used for the mounting of gypsum boards, and while doing so, he lost grip of the frame and the sharp edge of the frame cut the dorsal aspect of his right thumb and the extensor tendon of his right thumb was completely cut (“the Accident”).

3.  Unfortunately, the AP’s injuries turned out to be quite serious.  He was hospitalized and operated on repairing the tendon which was protected by K-wire.  He then underwent long periods of physiotherapy and occupational therapy.  He also suffered adjustment disorder psychiatrically.  The Certificate of Review of Assessment dated 10 September 2018 (“Form 9”) assessed the loss of earning capacity permanently at 3% and the period of absence from duty necessary as a result of the injury began from 23 September 2015 and up to 25 July 2018.

4.  On 19 April 2017, the AP commenced this application against R1 to seek employees’ compensation.

5.  On 28 March 2018, the 2^nd respondent (“R2”) was joined[1] and was claimed by the AP to be liable as the principal contractor under section 24(1) of the Employees’ Compensation Ordinance Cap 282 (“ECO”), which reads

“24. Liability in case of employees employed by sub-contractors

(1)         Where any person (in this section referred to as the principal contractor), in the course of or for the purposes of his trade or business, contracts with a sub-contractor for the execution by or under the sub-contractor of the whole or any part of any work undertaken by the principal contractor, the principal contractor shall be liable to pay to any employee employed by that sub-contractor or by any other sub-contractor in the execution of the work any compensation under this Ordinance which the principal contractor would have been liable to pay if that employee had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal contractor, then, in the application of this Ordinance, references to the principal contractor shall be substituted for references to the employer, except that the amount of any compensation calculated by reference to earnings shall be calculated by reference to the earnings of the employee under the employer by whom he is immediately employed.”

6.  On 18 October 2019, an interlocutory judgment on liability was entered against R1.

7.  On 15 May 2020, I allowed the application of the Employees Compensation Assistance Fund Board (“the Board”) for it to be joined as the 3^rd respondent but limiting its participation to appearing at this trial in respect of the issue as to whether R2 was a principal contractor.  I also allowed the Board to file the witness statement of Yip Chu Kan (“Yip”), who has been the sole director of R1[2].

The Property, the works, the issues and the parties’ respective case

8.  Concerning liability, the sole issue to be determined is the said issue of whether R2 was the principal contractor (“the Issue”).

9.  To understand the parties’ respective case, I need to briefly describe the Property and the renovation works.

10.  The Property was a small piece of land.  Two small simple village houses were erected on it.  One of them was shorter in height and in it was housed a kitchen and a toilet (“the Small House”).  The other was more a hut than a house.  It was taller and was built with metal sheets (“the Hut”).  The Small House and the Hut were very close to each other, maybe just 2 meters apart. The door of the Small House faced the Hut.

11.  According to R2, Wat had contracted with him to perform (a) water pipes and drainage work in the Small House, (b) the piping work of fresh water supply leading from the Small House to a connection point a distance away, and (c) to provide the proper drawings and documentations and to make an application on her behalf for the installation of a water meter for the supply of water to the Property (“the Water Works”). 

12.  According to Yip, the work R1 had contracted to do consisted of first dismantling the old wooden boards affixed to the ceiling and walls in the Hut and then mounting the gypsum boards onto the walls therein, as well as some minor work relating to a door inside (“the Work”).  It was during the performance of the Work that the Accident occurred to the AP.

13.  According to Yip and the AP, there were also some minor electrical works performed on the Property.  While R2 did not dispute that there were such minor electrical works performed there, he disputed that they were performed by workers engaged by him or that such were part of his contracted work.

14.  Succinctly, R2’s case is that he only contracted to undertake the Water Works, and having started those works and upon Wat’s enquiry, he introduced R1 to Wat.  Wat then dealt directly with R1 and engaged R1 to do the Work.  He was therefore not a principal contractor.

15.  The case of AP and the Board is that Wat had contracted all the renovation works of the Property to R2, which included the Water Works, the Work, the said minor electrical works and some other miscellaneous matters.  R2 then contacted Yip and then subcontracted the Work to R1.  Later, R2 also asked R1 to perform some additional painting work.

16.  All parties are agreed that the Issue is entirely a factual one, namely, whether R2 did contract from Wat the Work, among others, and then sub-contracted it to R1, or whether R1 contracted directly with Wat regarding the Work.

17.  Concerning quantum, R2 does not accept that the AP earned the amount at the time of the Accident as he claimed said that the compensation under section 10 as calculated by the AP was excessive.  I should mention that initially the AP appealed against the Form 9.  His appeal was withdrawn on 8 March 2019.

Representation and witnesses

18.  At the trial, the AP was represented by Ms Vanessa Kwok and the Board by Mr Gary Chung, both of counsel.  R1 did not appear.  R2 was represented by Mr Alex Fan of counsel on the first 2 days.  As the trial could not be finished within the 2 days allotted, a third day - 26 August 2020 - was scheduled.  For reasons that we need not go into here, I allowed R2’s application to re-fix the third day to 28 September 2020.  R2 acted in person on that day and had not lodged his written closing submissions, as further directed.  As all the submissions were written in English, I am delivering this judgment in English with an arrangement to interpret this judgment to R2 in Punti.

19.  The AP and R2 gave evidence for their own respective case, while Yip gave evidence for the Board.  At trial, the AP also sought to admit Wat’s Declaration as a piece of hearsay evidence.  It was opposed by R2.

Admissibility of Wat’s Declaration

20.  It is convenient for me to first rule on the admissibility of Wat’s Declaration.  The matter arose in this way.

21.  Up to 16 March 2020 when the Board applied to be joined as a party, the AP has not sought to call Wat as his witness.

22.  Earlier on by letters dated 26 September 2018 and 6 November 2018 and also through telephone calls made around the same time, the Board’s solicitors had tried to contact Wat with a view to calling her as a witness. These efforts were all to no avail.  In December 2019, the Board’s solicitors successfully contacted Wat who said she would provide a written statement. However, none was provided.  In the said application for joinder, the Board therefore did not further pursue its application for leave to file a witness statement of Wat.

23.  The AP’s solicitors on the other hand and by their letter dated 30 March 2020 to the court (which was a correspondence relating to the disposal on paper of the Board’s said application) indicated that they would subpoena Wat as a witness.  However, the AP only applied for the issuance of a subpoena duces tecum on 19 May 2020.  That was opposed by R2 by his solicitors’ letter dated 25 May 2020.  On 28 May 2020, this court gave the leave and the subpoena duces tecum was issued.

24.  At trial, Wat did not turn up to give evidence.  The court was informed that the AP’s solicitors were unable to effect the service of the subpoena on Wat.  Ms Kwok then sought to admit Wat’s Declaration[3] as a piece of hearsay evidence.  As said, R2 objected to it.  The Board merely adopted the stance and submissions of the AP and made no further submissions of its own.

25.  Wat’s Declaration consists of 2 pages.  It was handwritten written in Chinese with the heading “有關2015年9月23日位於祠堂村村屋內有人受傷之事故陳述” and stated therein to be written and signed by Wat dated 22 December 2019.  The court has read it de bene esse.  In it, Wat described how she was introduced to R2 and that she had contracted the renovation of the Property to R2 for a total sum of more than HK$200,000.  She listed the items of works listed in a quotation provided by R2.  A copy of the said quotation however was not attached to the Declaration.  The works listed by Wat there consisted more than the Water Works.  She also said R2 promised her orally to also perform some miscellaneous works not included in the quotation, and she also listed those. She also mentioned that she terminated the contract with R2 in November 2015 and also gave the reasons for it.  Importantly, she said twice in Wat’s Declaration that before terminating the contract with R2 she had not contracted with any other person to perform any renovation work on the Property, and that all the works on the Property were contracted to be performed by R2.

26.  It is common ground that the Declaration was sought to be admitted as a piece of hearsay evidence to prove the truth of the factual matters stated therein which otherwise could and should be testified to at trial by way of oral evidence, and that these factual matters were highly controversial. Evidently, the factual matters spoken to in the Declaration, if accepted, would be determinative of the Issue.

27.  Ms Kwok, on behalf of the AP, relies on section 47(1) of the Evidence Ordinance (“EO”):-

“47.   Admissibility of hearsay evidence

(1)  In civil proceedings evidence shall not be excluded on the ground that it is hearsay unless—

(a)  a party against whom the evidence is to be adduced objects to the admission of the evidence; and

(b)  the court is satisfied, having regard to the circumstances of the case, that the exclusion of the evidence is not prejudicial to the interests of justice.”

28.  Ms Kwok also cited in support the case of Lily Cheung v Cheung Wai Kwok[4]. There, the court refused to exclude the witness statements of the 1^st defendant who would not be able to give oral evidence at trial.

29.  Ms Kwok also relied on section 49(2) of the EO, which sets out the considerations relevant to the weighting of hearsay evidence.  Section 49(2) provides:-

“49. Considerations relevant to weighing of hearsay evidence

(1) In estimating the weight, if any, to be given to hearsay evidence in civil proceedings the court shall have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence.

(2) For the purposes of subsection (1), regard may be had, in particular, to the following—

(a)   whether it would have been reasonable and practicable for the party by whom the evidence was adduced to have produced the maker of the original statement as a witness;

(b)   whether the original statement was made contemporaneously with the occurrence or existence of the matters stated;

(c)   whether the evidence involves multiple hearsay;

(d)   whether any person involved had any motive to conceal or misrepresent matters;

(e)   whether the original statement was an edited account, or was made in collaboration with another or for a particular purpose;

(f)   whether the circumstances in which the evidence is adduced as hearsay are such as to suggest an attempt to prevent proper evaluation of its weight;

(g)   whether or not the evidence adduced by the party is consistent with any evidence previously adduced by the party.”

30.  Ms Kwok submitted that it was “impractical” to call Wat and that excluding Wat’s Declaration would be prejudicial to the interest of justice.

31.  For the reasons given below, I reject that submission.

32.  In my view, the consideration of this matter must begin with the general rule of evidence at trial, as clearly stated in O38 r1, thus:-

“General rule: witnesses to be examined orally (O.38 r.1)

1.        Subject to the provisions of these Rules and of the Evidence Ordinance (Cap. 8) and any other written law relating to evidence, any fact required to be proved at the trial of any action begun by writ by the evidence of witnesses shall be proved by the examination of the witnesses orally and in open court.”

33.  Lily Cheung was a probate action in which the plaintiff contested with the 1^st defendant (who was the plaintiff’s adopted father) and the 2^nd defendant (who was also adopted by the 1^st defendant and the deceased) for the right to obtain the Letters of Administration of the deceased, the alleged wife of the 1^st defendant.  After examining the relevant provisions in O38 and section 47 of the EO, Deputy High Court Judge Leung held that there existed a discretion of the court in admitting witness statements intended to be relied on as hearsay evidence.  The learned judge then refused to exclude the 1^st defendant’s witness statements because the 1^st defendant was 92 years old and his health condition had so deteriorated by then that he could no longer give oral evidence, and the 1^st defendant was the only person who could testify to his marriage to the deceased (which was disputed by the plaintiff).  Clearly pivotal to the decision was the fact that the 1^st defendant’s inability to give oral evidence was “a result of circumstances beyond his control”[5]. It is clear from the decision that such discretion was to be exercised rarely and in exceptional circumstances.  The learned judge highlighted that the case before him was an exceptional one in paragraphs 61 and 67 of the judgment, which introduced and concluded his said decision:-

“61.  The question is whether the statement should be excluded without prejudice to the interests of justice in the circumstances of the case. As mentioned, in the normal case where there is no excuse for the failure to call the witness or for the refusal of the witness to testify, the answer may be more apparent.

…

67.  This is of course the decision on the admissibility of the statements of the 1^st defendant in the circumstances of the present case.  Simple reliance on this decision to suggest the opening of a backdoor for admitting into evidence contents of statements of witnesses who are not called will be misplaced.”

34.  I find the case of Cheung Wei Man Vivien & Anor v Centaline Property Agency Ltd[6], a case cited by Mr Fan for R2, apposite.  There, the plaintiff filed a hearsay notice under s 47 of the EO for admission of an affirmation of a deponent who was in Malaysia and who did not wish to be cross-examined.  The defendants then took out a summons for an order not to admit the affirmation unless the deponent was available for cross-examination.  Lam J (as the learned VP then was) made an order in terms of the defendants’ summons, holding among others, that a party could not rely on s 47 and the then new rules as to admission of hearsay evidence to escape from the obligation of producing a deponent of an affirmation for cross-examination.  There, the affirmation evidence related to one very important factual dispute of the parties.  The learned judge observed that such evidence was highly controversial, and it was very difficult to assess the deponent’s credibility without any cross-examination.  The learned judge then concluded that unless the deponent was available for cross-examination, it would not be prejudicial to the interests of justice to exclude the affirmation.

35.  In the present case, in my judgment no exceptional circumstances were established justifying the proving of those factual matters by hearsay rather than by the examination of Wat orally in open court.

36.  The reason for and the circumstances surrounding the failure to serve the subpoena on Wat was explained through Ms Kwok[7] as follows, but no evidence was given thereon.  A clerk of the solicitors of the AP contacted Wat by phone on 29 May 2020 (a Friday, when the trial was due to commence on 2 June 2020, next Tuesday) and was told by Wat that she was suffering from cancer and was receiving chemotherapy and that she did not want to attend trial or receive legal documents.  There was then no further contact with Wat or any other attempt made to serve her with the subpoena.  There is thus no evidence showing the state of Wat’s health condition, not to say actual proving that she was actuallymade unable by her health condition to attend trial to give evidence.

37.  Moreover, there was this matter of delay on the part of the AP to apply for the subpoena.  There was no explanation proffered as to why the subpoena was not applied for any earlier than 19 May 2020.  Bearing in mind that Wat remained to a degree cooperative by providing and signing the Declaration and taking the telephone call from the said clerk, it seems to me that this case was no different from usual ones where an unmotivated independent witness would need to be formally summoned; but in this case the AP has failed to do in a timely manner.

38.  Ms Kwok contended that a hearsay notice was served to R2 on 20 March 2020, which R2 has not objected to.  I find that neither here nor there as the general rule is that stated in O38 r1 and it is only in exceptional circumstances, rather than as a matter of course, that a statement from a witness would be admitted as hearsay without calling the maker.   In any case, on 30 March 2020, which was 10 days after the hearsay notice was served, the AP has indicated by a letter to the court and copied to R2 that it would subpoena Wat.  Being so notified, it is not unsurprising that R2 did not voice any objection to the hearsay notice then.

39.  Regarding the AP’s reliance on s 49 of the EO, I take the view that unless, as a matter of first hurdle, it can be demonstrated that there are exceptional circumstances properly justifying a statement or witness statement to be admitted as hearsay evidence without calling the maker to attend trial to give oral evidence, the weight of the hearsay evidence does not fall to be considered; and therefore the reliance on s 49 of the EO is misplaced.  The weight to be attached to that statement or witness statement should not, of itself, be regarded as a factor justifying the adoption of such an exceptional course.  Indeed, the more important the factual matter to be proved and the more controversial the factual matter is, the more the reason in the interests of justice that the proving witness should attend trial to be examined orally in open court.  Therefore, I find it unnecessary to embark on the exercise of analyzing the application of the various considerations set out in s 49(2) of the EO, as Ms Kwok invited the court to.

40.  Rather, by reasons of the above and considering that the factual matters spoken to in Wat’s Declaration were so important and controversial, and there exist no exceptional circumstances justifying the admission of Wat’s Declaration as hearsay rather than calling Wat as a witness to prove those factual matters, and therefore justifying the deprivation of the opportunity to test and contest Wat’s evidence by R2, it would not be prejudicial to the interests of justice to exclude Wat’s Declaration.

41.  I would accordingly so exclude it and disregard all matters that were said therein.

Evidence and discussion on the Issue

42.  The AP evidence was that the day when he was injured was the second day he worked on the Property.  At that time, he did not know whether there was a principal contractor.  He was first told by Yip that there was a principal contractor on the occasion when he met with Yip several days after the Accident in Tsuen Wan when he gave Yip the sick leave certificates.  On that occasion, Yip did not tell him the name of the principal contractor, but said he would handle the matter for him to try to reach a settlement with the principal contractor.

43.  Sometime after the Accident and before he filed the Notification of Accident[8] to the Labour Department on 14 October 2015 (“the Notification”), the AP went back to the Property to take pictures for record.  There, he was told by a villager that the owner of the Property was one “Ms Wat” and he gave the AP Wat’s telephone number.  The villager also gave him a plan depicting the locality.  The AP then called Wat to enquire.  Wat only answered curtly that she had only engaged someone to renovate the Property and the person responsible for the renovations was surnamed “趙” and that this (the Accident) did not concern her.  The AP attached copies of the photo he took that day and the said plan to his supplemental witness statement.

44.  The AP explained[9] that at the time he filed the Notification, he could not write due to his right thumb injury, so a friend of his filled it out for him.  In section C of the Notification, originally the name of Wat was filled in as the principal contractor.  The AP was then told by a staff of the Labour Department that the owner of the Property should not be named as the principal contractor, he therefore crossed out Wat’s name and address and wrote thereon instead “判上判, 趙生” because Wat told him in the said telephone call that the one responsible had the surname “趙”.

45.  Concerning whether at the time there were other works carried out on the Property and, if so, by whom, the AP could only remember there were one or two workers not employed by R1 who was performing electrical works.

46.  When giving evidence, the AP was attentive, direct, spontaneous and straight forward.  I believe he was telling the court the truth as best he could remember it.  He was not shaken in cross-examination.  Particularly, his evidence about how he came to contact Wat and what Wat told him was consistent with the alterations that were made in the Notification and his explanation as to why these alterations were made.  I find him a credible and reliable witness.  I accept his evidence as set out above.

47.  Yip, in his witness statement filed on 18 May 2020, gave a detail account with specific dates as to how R2 subcontracted the Work to R1.

48.  He said he was contacted by R2 in early September 2015 about the Work on the Property.  Then on 9 September 2015, he met up with R2 who took him to the Property to take a look for the purpose of giving a quote.  In oral evidence, he added that he and R2 went into the Hut and that R2 described to him what the works to be done were while he took the measurements.  He then quoted the price of HK$20,000 for the Work which was agreed to by R2.  Yip then said that R2 gave him HK$10,000 as the first payment.  Then on 14 September 2015, Yip purchased the materials and together with the AP transported the same to the Property.  Then R1 sent the AP and another worker named 羅永恆 to start working in the Hut on 22 September 2015.

49.  In his witness statement, Yip also set out all the details regarding payments by R2.  Yip said that later on R2 asked that certain additional painting work be done on the Property.  He and R2 agreed the price for this additional work at HK$5,000.  He then arranged a worker named 林健飛 (“LKF”) to go to the Property to do the painting work.  Yip said that on 12 October 2015, R2 on the Property paid to LKF HK$10,000 in cash being the balance of the price for the Work. Then on 20 October 2015, R2 paid the price of HK$5,000 for the additional painting work by directly transferring the sum into the bank account of LKF.

50.  In oral evidence, Yip said that on the occasion he visited the Property for the purpose of giving a quote, he saw workers working on the ceiling of the Small House and undertaking electrical work and R2 was giving instructions to them.

51.  Yip categorically said that he had never even met Wat, not to say having dealt with her directly or having been engaged by her to perform the Work.

52.  I would observe at this juncture that Yip was direct, spontaneous, clear and firm when giving evidence.

53.  R2 in his witness statement dated 17 October 2019 (“WS1”) said that after he had begun to undertake the Water Works, Wat inquired with him as to whether he would undertake renovation works other than water pipes and drainage work. As non-water works were “obviously” and “totally” outside his knowledge and skills, he introduced his friend Yip to Wat.  Thereafter and at all times, Wat contacted and discussed directly with Yip about the content, scope and the price for such non-water works.

54.  In WS1, R2 said many times and emphasized that he had never asked, nor had he the right to ask, nor did he know anything about such non-water works. In paragraph 8 of WS1, R2 listed 7 items that he did not ask or know about the non-water works undertaken by Yip, including what building materials and equipment Yip used, whether Yip or R1 had arranged or engaged employee(s) to perform such non-water works on the Property.  In paragraph 15 of WS1, R2 specifically said that he did not know whether the non-water works consisted of the mounting of gypsum boards, or whether any one actually performed such work on the Property or who performed such work.

55.  In his supplemental witness statement filed on 29 May 2020 (“WS2”) in response to Yip’s witness statement, R2 denied everything that Yip said and added

a.  that this occasion was the first time he introduced a client to Yip;

b.  because he and Yip were friends, he never wished to engage in a superior/subordinate relationship with Yip and therefore he had never sub-contracted any work to Yip;

c.  at the time when Yip (or R1) started working on the Property, the Water Works were completed up to 70 to 80%.  He himself has all along been focusing on his own work and did not notice if anyone else was working with Yip there; and

d.  he himself all along was working outside the house(s) on the Property, while Yip was working inside the house(s) all the time.

56.  Three days later on 1 June 2020, R2 filed his 2^nd supplemental witness statement (“WS3”).  In WS3,

a.  R2 clarified that in WS2, when he said he was all along working outside the house(s), he meant he was working outside the Hut; and when he said Yip was working inside the house(s), he meant that Yip was working inside the Hut;

b.  R2 reiterated that, in all, he knew nothing about the works performed or the situation inside the Hut; and

c.  In paragraph 8, R2 supplemented the details about his introduction of Yip to Wat.  He said that

i.  when Wat made the relevant request, the Water Works were essentially completed, at the time the only item not completed was the application for the installation of a water meter on behalf of Wat;

ii.  after Wat made the request, on a day, the date of which he could not remember, he arranged to take Yip to the Property.  After introducing them to each other, he left.  He had not participated in their discussion and did not know its contents; and

iii.  that day, Yip and Wat were talking face to face standing on the open ground between the Small House and the Hut.  He did not know whether they had contacted each other since.

57.  Having observed and heard R2 when he was giving evidence, I was not impressed at all by him as a witness.  He was often evasive.  As set out and discussed below, he gave contradictory accounts on many occasions, and some of his evidence on important matters was inherently implausible or highly improbable:-

a.  When cross examined by Mr Chung as to whether he was present when Yip was working on the Property, R2 initially answered: “唔喺度，唔清楚”.  R2 then clarified in the next answer that he himself was not there.  Then in answer to the court’s clarification questions, R2 said firmly that on no occasion were he and Yip present on the Property at the same time.  Mr Chung then confronted R2 with what he said in WS2 and WS3 that he was working outside the Hut all the time while Yip was working inside the Hut all the time (see paragraphs 55 and 56 above) and asked that if he was not present, how would he know that Yip was working in the Hut all the time.  R2 then said that he was working in the Small House, he was not sure and he was only guessing.  When pressed further, R2 said that he could not now remember.  Later on, when Mr Chung confirmed with him his evidence in the context of whether he knew what Yip was doing on the Property, R2 confirmed that it was his evidence that he had seen Yip on the Property, but he did not pay much attention to what he did.  In re-examination, R2 was reminded of the various answers he had given and was asked if indeed he saw Yip on the Property, he answered: “因為係我介紹佢做裝修，估係好正常。”.  Whether he had been present with Yip together on the Property is a straight forward matter on which R2 should have no difficulty in giving a direct answer one way or the other according to what he could remember, but as set out above, he gave convoluted and contradictory answers and versions.

b.  R2 was asked whether Wat had mentioned what kind of renovation works she had in mind to do when she asked R2 whether he also undertook other renovation works.  R2 said that she did not.  When pressed that if the nature and some details of those works were not mentioned, how could R2 know that they were outside his knowledge and skill, R2 maintained that he was skilled only in water works, anything else would be outside his skills.  When further pressed, he insisted that he himself also had not asked Wat, nor was he interested to find out about them so as to see if he could take those up and then engage workers skilled in those works to perform them, nor did he need to know them before he could introduce the right person to Wat or to relay them to Yip to get him interested so that he would travel all the way to the Property to discuss with Wat.  Clearly, it must be most natural in the course of things for Wat to mention, or R2 to ask, at least some basic information about the renovation works during the conversation.  It is highly improbable that R2 was not interested in taking these additional works on and then engaging workers skilled in those matters to perform the works, so that he could earn a profit therefrom.  It is a matter of common sense, and R2 being such an experienced contractor would know, that whoever he had in mind to refer the work to would need to be given some basic idea of the scope and kind of renovation work, such that one would expect R2 would ask Wat for the purpose of making the referral.  Yet, R2’s version is none said, none asked.  In my view, R2’s such version of the conversation between him and Wat is wholly artificial, inherently implausible and highly improbable.  I have no hesitation to reject it.

c.  In WS3, R2 said that he left after having introduced Yip to Wat, but in the next sub-paragraph in paragraph 8 there, R2 said that Wat and Yip stood on the open ground between the Small House and the Hut to discuss.  When cross-examined, R2 first said that he stayed for another 10 to 20 minutes after the introduction.  When further asked as to whether Wat and Yip stayed on the open ground the whole time for those 10 to 20 minutes, R2 did not give a straight answer and evaded those questions by giving irrelevant answers.  It was only when the question was repeated a third time did he give a direct answer that they were standing on the open ground for all that time.

d.  As have set out above, in WS1, WS2 and WS3, R2 has taken pains to emphasize and go to great details to show that he knew nothing whatsoever about the Work.  In cross-examination, R2 further maintained that even though he and Yip were friends, they had no conversation with Yip about the Work and that while on the Property he had paid no attention whatsoever about the Work.  He explained in cross-examination that he did not care about things that were outside his skill and expertise.  I find R2’s claim that there were no such conversations or that he did not pay such attention artificial, highly improbable and hard to believe.  As mentioned, the Property was only a small plot of land, the door of the Small House faced the Hut and they were just about 2 meters apart.  September and November are hot months and one can hardly imagine whoever working in the Hut would keep the door tightly shut and not open it for ventilation.  In other words, this court finds it most hard to believe that, even if R2 had no conversation with Yip or anyone about the Work or that he had not have gone into the Hut even for once (as he claimed, and this court disbelieves), that he had not nevertheless noticed that gypsum boards were being mounted in the Hut, or that materials for that purpose were transported to and kept on the Property, or that there were other workers engaged by Yip and such.  R2’s claim that he has absolutely no knowledge about all these matters relating to the Work is so highly improbable and totally incredible.  I do not believe or accept it at all. 

e.  From what I have set out above in paragraphs 55 and 56 as to what R2 said concerning the timing when Wat asked him whether he would do other renovation works, it would be noticed that there were 2 versions given in WS2 and WS3, which were filed just only 3 days apart.  In the former, R2 said that 70% to 80% of the Water Works had completed, while in the latter he said that all were completed except for the application for the water meter.  In oral evidence, R2 yet gave a different version with details hitherto unmentioned. He said that at the time the copper water supply piping inside the Small House was not finished and he then gave vague descriptions of the unfinished piping being certain sections of piping leading to the sink and such.  This was amidst the backdrop of whether he was present on the Property with Yip and whether there were other works performed on the Property.  Naturally, if the Water Works were then essentially finished except for the application for the water meter (as he said in WS3), there would be no work for R2 to perform and therefore no reason for him to be on the Property.  Later on, when crossed-examined by Ms Kwok, R2 said that he had engaged a casual worker Mr Chu who was present on the Property all the time and who could attest to his version (yet R2 had not called him as a witness).  When asked whether workers had performed work on the ceiling of the Small House, R2 answered “好似，唔清楚”, and then later on, he modified his answer and said “冇，我唔識做，一定冇”.  As to whether there were electrical or painting works performed on the Property, R2 answered that he did not noticed.  Again, I find it hard to believe that R2 would not have noticed whether there were or were not such works performed.  I find his answer as to whether there were other works performed on the Property evasive.

58.  The above were just the more prominent instances.  In all, I am of the clear view that R2 was an unreliable and incredible witness.  I agree with Mr Chung’s submission that R2 had been making up stories and continued to do so when giving oral evidence.  I completely reject R2’s evidence where it conflicted with that of the AP and Yip’s.  I also reject his claim that in all his years as contractor he only engaged exclusively in water pipes and drainage work and not any other renovation works.

59.  In cross-examination, Mr Fan for R2 repeatedly insinuated against Yip that he was giving untruthful evidence to make R2 liable so that he himself or R1 might be relieved of the responsibility to pay the compensation.  There was however no specific factual matters or circumstance put to Yip to base such criticism on.  Mr Fan also confirmed with the court that there was no allegation that the AP was colluding with Yip or R1.  It was also not disputed that as a matter of law even if R2 were found liable, R1’s liability remained and would not be lessen, as R1 and R2’s liabilities to pay the AP the compensation were several.  In the premises, there is simply no basis for such criticism and I so find. 

60.  On the contrary, this court finds Yip a credible and reliable witness. As said, he gave direct, spontaneous, clear and firm answers in oral evidence. The evidence he has given in his witness statement was cogent and detailed.  By giving evidence on the exact dates and events, as well as detail accounts about how various payments were paid by R2 to R1, Yip has given R2 an opportunity to contest specifically, such as to produce bank statements to show that there was no bank transfer to LKF of HK$5,000 on 20 October 2015, or produce evidence to show that R2 has not visited the Property on 9 September 2015 and so on.  It is very telling that no such specific contest was mounted, or specific evidence proffered to rebut.  Instead, in WS2 and WS3 R2 only barely denied everything Yip said, bolstered his claim that he knew nothing whatsoever about the Work, and explained that because they were friends, he would not sub-contract work to Yip; and at trial, R2 mainly attacked Yip based on the said criticism.  In all, I accept Yip’s evidence as set out above.

61.  Based on the AP’s evidence, particularly regarding what Wat told him, and Yip’s evidence, which I accept, I find the following.  R2 was the only person engaged by Wat to perform all the renovation works on the Property and the 2 houses thereon, such renovation works included the Water Works, the Work, certain electrical work and the ceiling in the Small House.  R2 then sub-contracted part of the renovation works, namely the Work, to R1 for the sum of HK$20,000.

62.  In the premises, I find that R2 was a principal contractor within the meaning of section 24 of the ECO and I hold that R2 is severally liable with R1 to pay the AP the employees’ compensation, as assessed below.

Compensation under section 9 of the ECO

63.  As there is no appeal under section 18 of the ECO by R1 or R2, and the AP’s appeal was withdrawn, I will assess compensation based on Form 9, in which the AP was assessed to have suffered 3% loss of his earning capacity caused by the injury.

64.  R2 did not accept the evidence of the AP and Yip that between the time when the AP was first employed by R1, namely on 25 August 2015, until the date of the Accident on 23 September 2015, the AP worked for 21 days at the daily wage of HK$1,000 a day.  The AP further said he was provided lunch by R1 at HK$70 to $80 per day.  Their such evidence was tested in cross-examination by Mr Fan.  Their such evidence was not shaken.  Having found that the AP and Yip were credible and reliable witnesses, I accept their evidence regarding the AP’s income.  I find that the AP’s monthly earnings to be (HK$1,000 + HK$75) x 21 days = HK$22,575.

65.  The AP was aged 46 at the time of the Accident.

66.  The compensation to be awarded to the AP under section 9 of the ECO is HK$22,575 x 72 x 3% = HK$48,762.

Compensation under section 10 of the ECO

67.  In Form 9, it was assessed that the period of the AP’s absence from duty necessary as a result of the injury was from 23 September 2015 to 25 July 2018, a total of 1,037 days.  Deducting therefrom the statutory holidays in that period of a total of 35 days, the absence from duty were 1,002 days, which were more than 24 months.

68.  Periodic payment for a further period not more than 12 months beyond a period of 24 months pursuant to section 10(5) of the ECO was prayed for in the Application herein.  Having been so claimed against, neither R1 or R2 lodged an appeal under section 18 of the ECO.  In R2’s written opening submissions it was said that the AP’s calculation was excessive and two High Court personal injury cases concerning the court’s consideration of the sick leave certificates issued by the treating doctors[10] were cited in support.  It is however well established that the assessments in Form 9 are conclusive in the absence of an appeal under section 18[11].

69.  In the circumstances, I will allow compensation under section 10 to cover the entire period as assessed in Form 9.

70.  The compensation to be awarded to the AP under section 10 is: HK$22,575 x 1,002/30 x 4/5 = HK$603,204.

Medical expenses under section 10A

71.  Ms Kwok has tallied the medical expenses as evidenced by the receipts in a table annexed to her opening submissions.  They total to HK$5,280. The amount was not disputed by R2.  I so award.

Disposal

72.  It is common ground that R1 had paid to the AP periodic payment and medical expenses in the total sum of HK$10,671, and credit will be given for this sum.

73.  In the premises, I will enter judgment against R1 and R2, who are severally liable for the same, in the sum of HK$646,575 (HK$48,762 + HK$603,204 + HK$5,280 – HK$10,671) together with interest thereon at half judgment rate from the date of the Accident to the date of this judgment.

74.  The court has a wide discretion on costs.  Presently, I take the following provisional views regarding the costs position in respect of each party, and would make the costs order nisi underlined below:-

a.  R1 did not take any part to contest the assessment of the compensation.  As can be seen above, the time and costs spent on matters concerning quantum are minimal.  Had it not been pursuing the claim against R2, and only the assessment of compensation against R1 in his absence was proceeded with, the hearing would be short, few documents would need to be referred to and counsel’s attendance probably not necessary.  It is thus fair that R1 should only pay the AP’s costs reflecting such a scenario.  I am minded to summarily and in a broad-brush manner assess a lump sum rather than have such costs taxed.  On a nisi basis, I order R1 to pay the applicant’s costs of the assessment of compensation against him summarily assessed at HK$35,000.

b.  The costs against R2 should follow the event.  However, I am not entirely satisfied with the whole scenario as to how the AP issued the subpoena against Wat late and then attempted by a side-wind to admit Wat’s Declaration as hearsay.  It was not fair nor of merits.  This matter has taken up substantial portion in the AP’s opening and closing written submissions, in R2’s opening submissions and the AP’s cross-examination of R2.  R2 successfully excluded Wat’s Declaration.  Appropriate costs provision should, in my view, be made in favour of R2 reflecting his success.  On a nisi basis, I order R2 to pay 90% of the AP’s costs of his claim against R2, with certificate for counsel, to be taxed if not agreed.  The AP’s own costs are to be taxed according to the Legal Aid Regulations.

c.  The Board asks that R1 and/or R2 pay its costs with certificate for counsel.  The Board has behaved properly and reasonably within its role and function and this court has been ably assisted by Mr Chung, appearing on behalf of the Board.  As reasoned and held by Ribeiro PJ in Wo Chun Wah v Employees Compensation Assistance Fund Board (2019) 22 HKCFAR 495, “… where the Board has been joined as a party and properly carries out its “filtering” or monitoring functions, the appropriate starting point should generally be no order as to costs …”[12]. Presently, I do not find any particular conduct on the part of any party that would justify a departure from this starting point.  Moreover, I bear in mind that R2 by losing has to bear the AP’s set of costs and that there was no fault or doing on his part that has caused the Board to intervene (in fact, he tried to resist it).  If he is ordered to pay the Board’s costs as well, then he would be paying 2 sets of costs through nothing of his making.  In the circumstances and on a nisi basis, I will make no order as to the Board’s costs.

75.  The above costs order nisi will become absolute unless any party applies to vary within the next 14 days by letter, stating therein the precise form of costs order that the party seeks, and I will issue paper directions for further conduct.

76.  It remains for me to thank Ms Kwok, Mr Fan and Mr Chung for their assistance.

77.  My clerk will make arrangement with R2 at the time of handing down of this judgment for it to be interpreted to him in Punti.

For hearing on 2-3 June 2020

For hearing on 28 September 2020

DCEC 849/2017

[2020] HKDC 333

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 849 OF 2017

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DECISION

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1.  The trial of these proceedings is scheduled to be heard on 2 and 3 June 2020.

2.  On 16 March 2020, the Employees Compensation Assistance Fund Board (“the Board”) took out a summons applying for :-

(a)     pursuant to section 25A(a) of the Employees Compensation Assistance Ordinance Cap 365 (“ECAO”) and Order 15 rule 6 of the Rules of the District Court, leave to be joined as the 3^rd respondent herein; and

(b)     leave to file witness statements of fact.

3.  The witness statements intended to be filed are that of one Mr Yip Chu Kan (葉柱根)(“Yip”) and that of one Ms Wat Yee Wai (屈綺慧)(“Wat”).

4.  Yip was the only director of the 1^st respondent (“R1”).  A copy of his signed proof of evidence was exhibited to the 2^nd affirmation of Cheng Ching Lim Evan filed on 20 March 2020, while his signed witness statement was provided to all concerned on 20 April 2020.  However, to date, the Board has not been successful in securing a signed witness statement from Wat, despite this court’s direction requiring the Board to do so.

5.  As the scheduled hearing of the summons on 31 March 2020 would have been adjourned as a result of the General Adjournment Period (“GAP”) already announced, this court by letter dated 25 March 2020 asked the parties to state their positions regarding the summons and whether they agreed to disposing of it on paper without an oral hearing.  The Applicant indicated that he did not oppose it.  R1 did not respond and per my direction was treated as not opposing.  The 2^nd respondent (“R2”) opposed and expressly indicated that no affirmation of opposition need to be filed.  All parties who have responded agreed to disposing of the summons on paper, which I now do.

6.  Mindful of dealing in one go with all interlocutory matters that might potentially arise concerning the calling of Yip as a witness, this court by letter dated 13 May 2020 enquired if the Applicant would himself apply for leave to file the witness statement of Yip.  That enquiry is now overtaken by this decision and the Applicant’s response thereto is no longer necessary.

Background

7.  The following are the salient backgrounds.

8.  On 23 September 2015, the Applicant suffered a work injury to his right thumb while renovating Wat’s village house in Fanling (“the House”).  He was then employed by R1.

9.  In the Form 2 dated 18 November 2015, the notice of the accident submitted by the R1 to the Labour Department, it was stated that R2 was the principal contractor. 

10.  By an application dated 19 April 2017, the Applicant claims employees’ compensation against R1.

11.  By a Notice given under section 25B(1)(a) of ECAO dated 20 April 2017, the Board was then informed of the Applicant’s claim.

12.  After a contested hearing in which R2 opposed and by a decision handed down on 28 March 2018, HHJ Levy allowed the Applicant to join R2 to claim against him compensation pursuant to section 24 of the Employees’ Compensation Ordinance (“ECO”) despite the expiry of the 24 months’ period after the accident to make a claim.  Section 24 essentially makes the principal contractor liable to pay employees’ compensation as if he were the sub-contractor employer.

13.  The only issue concerning the liability of R2 is whether he in fact was the principal contractor.

14.  R2’s case, as deposed to in his affirmation filed in 2017 for the said hearing before HHJ Levy, as stated in the Answer and as set out in his witness statement, is this.  Wat engaged R2 to perform water-pipe works in the House. While doing those water-pipe works Wat asked him if he would do other renovation works.  R2 declined as these works were outside his expertise.  He then introduced Wat to Yip.  Then after, Yip contacted Wat directly concerning those works, about which he knew nothing and were not involved in howsoever.

15.  R1 has never taken part in these proceedings.

16.  On 18 October 2019, interlocutory judgment on liability was entered against R1 (“the Default Judgment”) and an unless order was also made that if it failed to file and serve a witness statement as to fact within 28 days, it would “be debarred from adducing any factual evidence in the Trial” (“the Unless Order”).

17.  In late December 2019, the Board through its solicitors eventually was able to contact Wat who said she would provide a written statement, but as noted, has not yet so far.  In early March 2010, Yip provided the Board with the signed proof of evidence, and later, the signed statement.  Hence, this application by the Board.

Yip’s witness statement

18.  It consists of 13 paragraphs and 4 pages.  I have read it de bene esse only so as to gauge into the relevance of its contents for the purpose of this decision.  In gist, Yip spoke therein:-

(a)    about an enquiry made by R2 in early September 2015 as to whether the R1 was interested in being engaged to do some work in the House;

(b)    that he went with R2 to the House on 9 September 2015 to inspect and he then gave a quotation on the price;

(c)    that he or R1 has never met Wat and that he only liaised with R2 in relation to the work done in the House;

(d)    how he knew about the Applicant’s accident;

(e)    that R2 further engaged R1 to do some painting work in the House;

(f)    how R1 got paid by R2; and

(g)    that he had paid the Applicant certain salary for sick leave and medical expenses.

19.  R2 does not seek to dispute that these matters spoken to by Yip are highly relevant to the issue as to whether R2 was the principal contractor.

The Board’s reason for the application

20.  Section 25A(a) of ECAO provides:-

“If proceedings have been initiated to claim compensation or damages (whether initiated before, on or after the commencement* of this section), the Board may apply to the court to be joined as a party to the proceedings as follows—

(a) where no policy of insurance is known to be in force at the time of the accident to which the proceedings relate, the Board may apply to the court to join in the proceedings as a party in accordance with Order 15, rule 6 of the Rules of the High Court (Cap. 4 sub. leg. A) or Order 15, rule 6 of the Rules of the District Court (Cap. 336 sub. leg. H), as the case may require, to take over the defence as if it were the employer in the proceedings if—

(i)   the employer cannot be identified or, if identified, cannot be found;

(ii)   the employer is insolvent;

(iii)   the employer is dead or has been dissolved, wound up or struck off the register;

(iv)   the employer, for any reason, cannot be served with the notice of proceedings; or

(v)  at any time when the employer fails to attend the hearing, leaving the claim uncontested;”

21.  Paragraph 2(b), which is the relevant part, of Order 15 rule 6 of the Rules of the District Court provides:-

“(2) Subject to this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application—

(a) … ;

(b) order any of the following persons to be added as a party, namely—

(i)  any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon; or

(ii)  any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

22.  It is common ground that no policy of insurance at the time relating to the accident has been taken out by R1 or R2 and that R1 has failed to attend various hearings, leaving the Applicant’s claim uncontested.

23.  Thus, the requirement under section 25A(a) to that extent is fulfilled.

24.  The Board says its interest would be prejudiced because:-

(a)    There was no insurance policy in force;

(b)    R1 is a limited company and in all likelihood would not be able to pay the compensation that would be awarded to the Applicant;

(c)    Having now made claim against R2, even though eventually unsuccessful, the Applicant would have fulfilled the requirements of section 16(3)(a)(ii) of ECAO, thereby making the Applicant eligible for payment from the Employees Compensation Assistance Fund (“the Fund”);

(d)    Without meaning any criticism against the Applicant, the plain practical reality is that if the Applicant fails to establish at trial liability as against R2,

(i)    the only downside for the Applicant is the liability to pay the costs of R2.  As the Applicant is legally aided, such costs would likely be borne by public fund;

(ii)    while R2, who appears to have sufficient assets to pay the compensation, would be let off his liability under section 24 of ECO;

(iii)    the Board would be left paying the compensation which should and could have been paid by R2.

25.  The Board therefore says it is under a duty, and ought to be given leave, to intervene to present properly the case on liability against R2, including proffering the evidence of Yip.

26.  The Board states clearly that it does not wish to disturb the Default Judgment against R1.  I understand also that it does not really seek to intervene in other issues save the one above-mentioned.

R2’s opposition

27.  R2 does not dispute, or seriously dispute, that the interest of the Board would be prejudiced in the circumstances as said in paragraph 24 above.

28.  Mr Fan, counsel for R2, advances 4 grounds of opposition, thus:-

(a)    Substantial delay without reasonable explanation;

(b)    The Board’s “conduct in the EC Claim going beyond the statutory limit”;

(c)    “Default judgment entered against the 1^st respondent”; and

(d)    “The Unless Order”

“The statutory limit” for the Board’s intervention

29.  This ground of opposition, as I understand it, runs thus.

30.  The wording in section 25A(a) of “to take over the defence as if it were the employer in the proceedings” limits the Board’s role in intervening to merely “defending” the employee’s claim whether in liability or quantum.

31.  The purpose of the Board’s present intervention is to try to make R2 liable, and therefore is outside “the statutory limit” of “defending”.

32.  Mr Fan further seeks to booster the point by arguing that the Board “is in effect advancing a counterclaim against R2 via backdoor” when it is well established that a counterclaim has no place in employees’ compensation proceedings.

33.  Mr Fan cites in support his advocated construction of section 25A(a) as imposing “the statutory limit” the descriptions of the Board’s role made by Ribeiro PJ in Wo Chun Wah v Employees Compensation Assistance Fund Board[1]:-

“the legislature must have envisaged the board being able actively to test, limit or resist the employee’s claim”[2]

“a “filtering role” to screen out unmeritorious or inappropriate claim”[3].

34.  I find that the advocated construction is not at all supported by the case, which dealt with the 2 questions placed before the CFA which have no bearing with the now advocated construction of section 25A(a).

35.  Moreover, it is very clear, in my view, that the above descriptions were never meant by Ribeiro PJ to be an exhaustive list of the Board’s role in joining the proceedings under section 25A(a) or the construction of what the words “to take over the defence as if it were the employer in the proceedings” mean, not to mention as imposing “a statutory limit” to the Board’s role when joining such proceedings.  The whole paragraph 24 in that judgment should be looked at:-

“Unlike section 25 (dealing with ECO claims), section 25A(a) is not explicit about the consequences of joinder.  It does not, for instance, expressly provide for the rights and liabilities of the employer to be vested in the Board in respect of the action for damages. Nevertheless, in authorising the Board to take over the defence “as if it were the employer”, the legislature must have envisaged the Board being able actively to test, limit or resist the employee’s claim regarding liability and/or quantum to ensure that the Fund’s resources are properly applied.” 

36.  As can be seen, the learned PJ began in that paragraph by stating that section 25A(a) is not explicit about the consequences of joinder and then observed what the legislature must have envisaged that the Board is thereby empowered to do to ensure that the Fund’s resources are properly applied.  The learned PJ clearly was never addressing his mind regarding the limits of, or limiting the Board’s role in, the joinder.  What was clearly expressed, rather, is the Board’s duty and function to ensure that the Fund’s resources are properly applied.

37.  It is trite that the ECAO should be construed by a purposive approach.

38.  The statutory scheme is clear.  Under section 24 of the ECO, the principal contractor of the sub-contractor who employed an employee to execute work in the course of which injury resulted is liable to pay compensation to the employee as if it were the sub-contractor employer.  Under section 16(3)(a)(ii) of the ECAO, only an employee who has taken such proceedings against a principal contractor to recover payment is regarded as “being unable to recover from an employer” and therefore eligible to apply for payment by the Fund.

39.  Therefore to ensure that the Fund is properly applied, the Board is duty bound on the one hand to properly test or limit (among other things) the employee’s claim, as much as on the other hand, to properly ensure that the principal contractor, who properly ought to pay, pays.

40.  I do not think I am constraint by its wording to read section 25A(a) as thwarting those objectives by limiting it to merely “defending” in the sense now advocated.

41.  In Tu Zhiqiang v Hap Sang Co (a firm)[4],CJHC Cheung (as he then was) observed:-

“In this regard, the taking over of the defence as if the Board were the employer in the proceedings must mean something over and above what a normal intervener would do (that is, contesting the claim). The taking over of the defence must mean the taking over of the defence from the employer, similar (but not entirely identical) to the situation where an insurer takes over from the insured the defence of a claim made against the insured…”[5] (my emphasis)

42.  The learned judge there in no unclear terms observed that by taking over the defence, it must mean something over and above merely contesting the claim.  He likened that to an insurer taking over the defence of the insured.  In that regard, it is not uncommon or impermissible for an insurer, in “defending” the claim against the insured, to try to establish the liability of a co-defendant to achieve an advantage whether in law or to help attain a better bargain or settlement.

43.  R2’s argument and analogy that the Board is in effect “counterclaiming” is clearly wrong, and I reject it.

44.  In my view, section 25A(a) allows the Board to be joined to take such steps in the proceedings as the employer would have been entitled in law to.  I reject “the statutory limit” R2 now advocates together with this ground of opposition.

The Default Judgment

45.  R2 argues essentially that in taking the present steps to try to “make R2 liable”, the Board is trying to circumvent the Default Judgment and therefore is an abuse of process.

46.  With respect, I must reject this argument.  R2 himself submits, rightly, that the liability of R1 and R2 to pay the compensation is joint and several. It therefore follows that even if R2 is liable to pay, R1’s liability in law remains. As a matter of law, R1’s liability would not thereby be replaced by that of R2.  There is therefore no “circumventing” of R1’s liability.  As mentioned, R2 does not challenge that the Board’s interest would be prejudiced in the circumstances alluded to in paragraph 24 above.  It is in my view abundantly clear that the Board is now merely trying to perform its statutory duty to ensure the integrity of the scheme as provided by section 16 of the ECAO, namely that recovery from those liable to pay ought to be properly exhausted before resort to the Fund.

The Unless Order

47.  R2 then argues that the Board is bound by the Unless Order, that it should have first applied for relief against the Unless Order and not try to by-pass it by seeking leave to file the witness statement of Yip.

48.  This argument again is predicated on R2’s construction of the words “to take over the defence as if it were the employer in the proceedings” in section 25A(a) such as to subject the Board to all the consequences of failure hitherto visited upon the employer who failed to attend or contest.

49.  I think the answer is simple.  Section 25A(a)(v) provides that the Board can apply to join “at any time”.  In the usual course of things, it would be most rare for the Board to know that the employer has not attended or has left the claim uncontested before the fact.  The Board would know only after the fact when sometimes various forms of adverse orders have already been made against the employer in his absence.  The Board would not be in a position to explain or justify those failures of the employer so as to seek relief.  The Board would be hand-tied and crippled and would not be fully able to actively test, limit or resist the employee’s claim regarding liability and/or quantum (among others) to ensure that the Fund’s resources are properly applied, which is the very purpose of section 25A(a).

50.  Moreover, as Ribeiro PJ said in the passage quoted in paragraph 35 above: “Unlike section 25 (dealing with ECO claims), section 25A(a) is not explicit about the consequences of joinder.  It does not, for instance, expressly provide for the rights and liabilities of the employer to be vested in the Board　…”.  The section in my view clearly does not seek to substitute the Board for the employer, thereby subjecting the Board to all the consequences of failure or inaction of the employer.

51.  I hold that the Board is not bound by the Unless Order, and this ground fails.

Undue delay

52.  R2 submits that there were unexplained and undue delay.

53.  In the said 2^nd affirmation of Cheng Ching Lim Evan filed on behalf of the Board, he deposed that:-

(a)    solicitors’ letters were sent to Wat and Yip respectively on 26 September 2018 and 6 November 2018.

(b)    Wat did not reply.  Telephone calls to her were also made but could not reached her.

(c)    Yip replied by letter of his solicitors Messrs Au Yeung Lo & Chung dated 27 November 2018 giving answers to the Board’s queries essentially consistent with the contents of Yip’s present witness statement.  I note that the letter ended with the remarks that should the Board had further enquiries they were free to contact them.

(d)     “… further investigations were taken (sic) by my firm.  Since my firm received no reply from Messrs Au Yeung, Lo & Chung, the investigations were stalled” until in mid-January 2020, the solicitors of the Board contacted Yip directly, having learned that he no longer acted by solicitors.

(e)    In December 2019, Wat was eventually contacted.  She said she would provide a statement which has not materialized.

54.  I note that from what was deposed, there appears to be little explanation as to why there were little follow up from early to late 2019. There is clearly delay which has not been quite satisfactorily explained.

55.  However, unexplained delay while is an important factor is not of itself determinative.  The court must look beyond at what prejudice, and its degree and extent, that the delay might have occasioned to the other party and also weight and give due regard to all relevant factors, particularly the primary aim of securing the just resolution of disputes in accordance with the substantive right of all the parties.

56.  It seems that presently, the only pieces of evidence proffered by the Applicant against R2 is the Form 2 and the Applicant’s account of a telephone conversation held between him and Wat (date and time unknown) in which Wat said the person responsible for the works had the surname 趙 [6]. While in the Applicant’s letter dated 30 March 2020 to the court in which the Applicant indicated he would not oppose this summons, it was mentioned that the Applicant intended to subpoena Wat.  To date, no application for a subpoena has been made.

57.  In short, as things presently stand there is a real likelihood that the scenario as put forth by the Board and set out in paragraph 24 above would occur, thereby to the prejudice of the Board.

58.  As said, the contents of Yip’s witness statement are indisputably highly relevant.  I am also of the view that the Board’s presence at trial would assist this court in arriving at a just resolution of the claim.

59.  R2 submits that if the Board is allowed to join and the witness statement is filed, the trial dates “will be postponed since R2 would need time to prepare the supplemental witness statement(s)”.  There was no explanation or details given as to why that is so.

60.  I have given the matter some keen thought.  I am however not persuaded that R2 would not have sufficient time to respond to the witness statement of Yip such that the trial dates would have to be derailed.

61.  As could be gathered by what I have already said, Yip’s version and R2’s version of events relating to the issue whether R2 was the principal contractor are diagonally different.

62.  I have mentioned above that R2 contested against the application by the Applicant to join him as R2.  In support of the point advanced by counsel acting for him that the Applicant’s claim against him was doomed to fail[7], R2 filed an affirmation on 19 December 2017 deposed to his version, which as I observed earlier, is the one maintained by him in the Answer and in his witness statement.  In other words, whether Yip’s statement is only filed now or not, R2 has had ample time and opportunities and indeed ought to have made due preparations in support of his own version, whether by way of producing witnesses or documents.

63.  R2 has had sight of Yip’s witness statement from 20 April to 4 May 2020, the latter being the date of his written submissions, yet he was unable to give any information or details to substantiate why a long time is required to prepare his supplemental witness statement in response, or who the potential witness(es) would be.  It seems to me that the need for a long time to respond is a bare claim without any substance.

64.  In the circumstances, I am of the view that 14 days would be adequate time for R2 to respond to Yip’s witness statement.

65.  In the round, I am persuaded that I should allow the Board’s joinder on terms limiting its participation, as follows, and to grant leave for it to file Yip’s witness statement.

Disposal

66.  In the premises, I make an order that :-

(1)     The Employees Compensation Assistance Fund Board be joined as the 3^rd respondent in these proceedings pursuant to section 25A(a) of the Employees Compensation Assistance Ordinance Cap 365 and O 15 r 6 of the Rules of the District Court, but its participation is limited to appearing at the trial herein in respect of the issue of whether the 2^nd respondent is a principal contractor within the meaning of section 24 of the Employees’ Compensation Ordinance Cap 282;

(2)     The Board do have leave to file and serve the witness statement of葉柱根 dated 18 April 2020;

(3)     The applicant and the 2^nd respondent do have leave, if so advised, to file and serve on or before 29 May 2020 supplemental witness statement(s) in response to the facts spoken to in the said witness statement of葉柱根.

67.  In view of the Board’s delay, I am presently of the view that it is not unreasonable for R2 to oppose.  I propose to make no order as to the costs of this application.  I so order on nisi basis to be made absolute unless any party within 14 days applies in writing to vary which then can be dealt with at the coming trial.

68.  The PTR was originally scheduled to be heard on 31 March 2020 which apart from GAP I also directed to be adjourned pending the outcome of this application.  In view of the tight timeframe, I will issue paper PTR directions on a nisi basis.

69.  Lastly, I thank Mr Yip, Mr Fan and the Applicant’s solicitors for their assistance.

Postscript

70.  Yesterday it was placed before me another round of written submissions by R2 which was sent to the Judiciary’s email address used during GAP and which was lodged without leave despite the direction that leave is required.  It seeks to argue that the Board cherry-picked, was self-contradictory and so on based on R2’s advocated construction of section 25A(a).  Leave was therein sought on the ground that “it is in the interest of justice and necessary”.  I refuse leave.

Lau & Chan, for the applicant

The 1^st respondent was not represented

Mr Alex Fan, instructed by Wat & Co, for the 2^nd respondent

Mr Timmy CH Yip, instructed by Cheng, Yeung & Co, for the intended 3^rd respondent

DCEC 849/2017

[2018] HKDC 335

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 849 OF 2017

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D E C I S I O N

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A.　THE JOINDER SUMMONS

1.  In these employees’ compensation proceedings, the legally-aided applicant claims against a Yip Kan Kee Contracting Company Limited (“Employer”) for compensation in respect of a personal injury by accident allegedly arising out of and in the course of employment with the latter on 23 September 2015.

2.  Section 14(1) of the Employees’ Compensation Ordinance (“ECO”) prescribes a time limit of 24 months for, among other things, the bringing of proceedings for the recovery of compensation unless a court, pursuant to s.14(4), “is satisfied that there was reasonable excuse for the failure … to make an application”.

3.  When the applicant applied by summons (“Summons”) dated 6 November 2017 for leave to join the alleged principal contractor, “趙裕興 trading as 趙興記工程公司” (“Chiu Yue Hing trading as Chiu Hing Kee Eng. Co” (“Intended R2”), as the 2nd respondent in these proceedings, he was late by about 1 and ½ months. 

4.  For convenience, I shall, unless otherwise specify, refer to the business name “趙興記工程公司” (“Chiu Hing Kee Eng. Co”) of the Intended R2’s business as “Chiu Hing Kee” and its proprietor “趙裕興” (“Chiu Yue Hing”) as the “Proprietor”.

5.  The Summons is opposed by an affirmation of the Proprietor. The unpresented Employer did not file any affirmation in opposition or attend the hearing of the Summons.

6.  Miss Lo of Messrs. Liu Chan Lam (“LCL”) represented the applicant on the assignment of Legal Aid. Mr Alex Fan, counsel, acted for the Intended R2 to oppose the Summons. The Employer was absent despite having been served with the Summons.

7.  By s.14(4) ECO, the applicant shall be required to satisfy this court there was reasonable excuse for the delay in joining the Intended R2.

B.　THE APPLICANT’S EXCUSES FOR THE DELAY

8.  The applicant supported his application by an affidavit of Miss Lo (“Lo’s Affidavit”), which was filed together with the Summons. After Mr Fan served his written skeleton on LCL, Miss Lo then filed a short 2^nd affidavit on 2 March 2018, principally to exhibit a business registration search record of Chiu Hing Kee dated 23 December 2016. Upon being satisfied with Miss Lo’s explanation that she had previously omitted to exhibit the said search record from Lo’s Affidavit, I granted leave to the applicant to file the said affidavit.

9.  Apart from the above evidence, the applicant also relies on the undisputed documents that LCL produced in the hearing bundle.  In addition, Miss Lo has also very helpfully attached to her skeleton submissions a chronology of events.

10.  Based on the evidence that LCL adduced on behalf of the applicant and the undisputed documents, Miss Lo put forward two excuses for the delay: (i) the Intended R2 failed to register the business; and (ii) the Employer failed to respond to the applicant’s written requests for the information of the principal contractor that the Employer had disclosed.

11.  Before discussing these excuses, it is necessary to mention at the outset the Form 2 (“Form 2”) dated 18 November 2015, the notice of the accident, which the Employer submitted to the Labour Department. In the Form 2, the Employer named “趙興記工程公司” (“Chiu Hing Kee”) as the principal contractor. It is the applicant’s case that the applicant hitherto did not have any knowledge that the Employer had a principal contractor, let alone its name.

12.  The Intended R2 was at fault, so the first excuse goes.  The Intended R2 has failed to register its business.  The fact of non-registration was in fact admitted by Mr Fan at the hearing upon the production of the result of the further exhaustive searches this court allowed Miss Lo to conduct at the hearing. It was therefore submitted that had the Intended R2 properly registered its business, LCL would have likely obtained the necessary information from the business registration searches they conducted on “趙興記工程公司” (“Chiu Hing Kee”) as early as 23 December 2016, the first search LCL conducted. Hence, Miss Lo stated, it would have allowed the applicant plenty of time well before the expiry of the prescribed time to join the Intended R2.

13.  For the second excuse, the applicant blamed the Employer, for having ignored the written requests made by LCL on three occasions on 6 January, 27 February and 28 March 2017 for the details of the principal contractor the Employer disclosed in the Form 2.  Since these requests were all made before the expiry of the limitation period, the applicant could have likely, Miss Lo submitted, made the application within time had the Employer cooperated by providing the necessary details.

14.  When neither of the above efforts yielded results, LCL then wrote on 21 September 2017 to the Labour Department for information of the principal contractor as disclosed in the Form 2.  It was then only on 9 October 2017 by the Labour Department’s reply that LCL was given the full name of the Intended R2 and its correspondence address to enable the applicant to issue the Summons.  By then, it was already out of time.

15.  Hence, Miss Lo submitted, due entirely to the fault of the other parties, the applicant was late in joining the Intended R2 and therefore the excuses are reasonable.

C.　GROUNDS OF OBJECTIONS

16.  The Intended R2 raised three grounds of opposition to the Summons: (i) the applicant has failed to satisfy a “joinder test” requirements provided in O.15 r.4 and r.6 (5)(a) and (6) of the Rules of the District Court (“RDC”); (ii) the applicant has failed to provide reasonable excuse for the delay, and (iii) the applicant’s intended claim against the Intended R2 is doomed to fail.

17.  I will refer to these three grounds respectively as the “joinder test”, “reasonable excuse” and “merits” grounds.  Since Mr Fan’s second objection on the ground of failing to provide “reasonable excuse” is the only ground that touches upon the requirement within the ECO framework, I think it is the most important objection, and will discuss it first.

D.　WAS THERE ANY “REASONABLE EXCUSE”

D.1　The relevant guidelines

18.  Both Mr Fan[1] and Miss Lo[2] cited a number of authorities on  the various considerations courts have taken into account when determining the question of “reasonable excuse” under s.14(4) ECO.  Since the question of what constitutes “reasonable excuse” is largely fact-sensitive, and may vary from one case to another, I do not therefore find it helpful for the parties to refer to previous decisions on the exercise of discretion. Undisputedly, the most authoritative guidelines are those stated by the Court of Appeal in Tsang Loi Fat (曾來發) v Sun Fook Kong (formerly known as Sung Foo Kee Ltd) (新福港 (前名為孫福記營造有限公司))[3], one of the authorities Miss Lo cited.

19.  When determining what constitutes “reasonable excuse”, the Court of Appeal in Tsang Loi Fat listed a number of factors that in their view are relevant: (a) the age, education level, intelligence and background of the claimant; (b) whether a claimant has sufficient knowledge for the making of a claim; (c) whether a claimant’s failure to make the claim within the prescribed time is due to his illness or not being aware of the extent of his injury; and (d) whether the failure was induced by the conduct of others: Tsang Loi Fat at paras [11] to [13].

20.  The Court in Tsang Loi Fat further emphasized that these factors it listed are non-exhaustive. Hence, I do not think that this court needs to be constrained from considering other factors not mentioned in Tsang Loi Fat. I indeed find other factors that are relevant in this joinder application, which will be discussed below.

D.2　The relevant factors

D.2.1　Length of delay

21.  The length of delay is obviously one of the important considerations. Needless to say, the longer the delay, the more prejudice that may likely be caused to a party proposed to be joined.

22.  The delay (of about 1 and ½ months) in this joinder application cannot by any measure be regarded as long.

23.  The Intended R2 does not contend otherwise. Neither did the Intended R2 suggest any prejudice caused by this relatively short delay. Mr Fan however took issue with the one-month period – between 9 October 2017 (when LCL obtained the information of the Intended R2 from the Labour Department, see para 14 above) and 6 November 2017 (the filing of the Summons) in respect of which Mr Fan contended the applicant should be called upon to explain. The applicant’s failure in adducing any evidence to explain the delay of one month should be regarded as a factor against his application, Mr Fan stated.

24.  It is true that there is no evidence as to why the applicant did not promptly issue the Summons shortly after LCL was provided with the needed information of the Intended R2 on 9 October 2017.  As the applicant is seeking an indulgence, the one month’s delay, albeit short, should be properly accounted for. I therefore find the lack of explanation unsatisfactory. Nonetheless, after having given allowance for the reasonable time needed for LCL to prepare the Summons such as taking instructions from the applicant, obtaining approval from the Legal Aid Department, and collating documents etc, I am satisfied that one month is a reasonable time for the issuing of the Summons.

D.2.2　The Intended R2 had failed to register its business

25.  The applicant relies heavily on the now admitted failure of the Intended R2 to register its business as an excuse for the delay.  Undisputedly, had the Intended R2 registered its business, LCL would have likely been able to, from the business registration searches they conducted, obtain the necessary details of the Intended R2 for joining it in the proceedings within time either on or about 30 June 2016 or 28 February 2017 on which dates LCL respectively conducted business registration searches on “Chiu Hing Kee”.   

26.  For this reason, I find that the Intended R2’s failure in registering its business provides an excuse that is as valid as it is compelling for the delay.  It cannot be denied that had the Intended R2 properly registered its business, the applicant, when commencing these proceedings on 19 April 2017, would likely have the details of the Intended R2 from the business registration searches LCL conducted on 30 June 2016 or at a later date on 28 February 2017 to claim against the Intended R2 as the 2^nd respondent alongside the Employer.  This Summons might not have been needed.

27.  I therefore accept the applicant’s explanation that one of the reasons for the delay is due to the fault of the Intended R2.

D.2.3　The Employer’s failure to provide details of the principal contractor

28.  An employer (sub-contractor) is statutorily obliged, pursuant to s.24(4) ECO, to provide to an employee, within 7 days of the employee’s request, the name and address of the former’s principal contractor.

29.  The Employer in this case is indeed subject to the s.24(4) duty to furnish the information of “趙興記工程公司” (“Chiu Hing Kee”) whom he had identified in the Form 2 as the principal contractor. According to the evidence LCL produced, I am satisfied that the Employer had indeed breached its statutory duty when it ignored the repeated requests made by LCL on three occasions on 6 January, 27 February and 28 March 2017.

30.  Granted that it is unknown whether the Employer had more information other than what had been stated in the Form 2, I am nonetheless satisfied that the Employer’s disregard of LCL’s written requests provides a legitimate excuse to the applicant for its delay in joining the Intended R2 within time.

D.2.4　Has LCL contributed to the delay

31.  After having found that the applicant had reasonable excuses on the basis of the two reasons that Miss Lo advanced, I should next deal with the criticisms Mr Fan laid against LCL in respect of two matters: (i) the applicant failed to adduce any evidence as to when the applicant or LCL first knew that the Employer had revealed the existence of a principal contractor; and (ii) there is no explanation as to why LCL only wrote to the Labour Department on 21 September 2017 (see para 14 above) to inquire about the information of  “趙興記工程公司” (“Chiu Hing Kee”) disclosed in the Form 2.

32.  In relation to criticism (i), the applicant appears to be quite vague as to when he learnt of the existence of a principal contractor in the name of “趙興記工程公司” (“Chiu Hing Kee”) disclosed in the Form 2. There is no evidence as to when the applicant or his solicitors obtained a copy of the Form 2 or been informed of the disclosure of “趙興記工程公司” (“Chiu Hing Kee”).

33.  After an examination of the documents LCL produced, I believe that the likely date, according to a reference to a letter of 30 June, would have been 30 June 2016 when the Labour Department provided a copy of the Form 2 to LCL. The reference can be found in the letter on 21 September 2017 from LCL to the Labour Department, in which LCL state: “We refer to your letter dated 30^th June 2016. We note from the Form 2 that 趙興記工程公司 [“Chiu Hing Kee”] was stated as the principal contractor” (underline is added).

34.  As it has been established that LCL probably knew of the name of “趙興記工程公司” (“Chiu Hing Kee”) as the principal contractor on 30 June 2016, it would mean that from around that time, according to the undisputed chronology of events, they had waited for about 15 months before they wrote to the Labour Department on 21 September 2017 (see para 14 above).  Whilst I accept that during this period of time, LCL was indeed taking various steps to find out information on “趙興記工程公司” (“Chiu Hing Kee”) by conducting business registration searches and making inquiries from the Employer, there is nothing, in my view, to have stopped them from concurrently approaching the Labour Department for information.

35.  Apart from repeating the same excuses by blaming the Intended R2 and the Employer, Miss Lo did not make any valid riposte to the criticisms by Mr Fan.

36.  In the absence of an explanation from LCL, the said delay could jeopardize the applicant’s joinder application if it is shown that such delay has materially contributed to the delay in the making of the joinder application.

37.  Pausing here, apart from the lack of explanation for the matters that are discussed above, I have further found that LCL have not adduced any evidence in relation to whether they have attempted to locate information of the principal contractor by the contact phone number the Employer also disclosed in the Form 2.  Such contact phone number might likely be a useful source of information on “趙興記工程公司” (“Chiu Hing Kee”) named by the Employer.

38.  If there had been evidence that the Labour Department had had the information of the Intended R2 well before 9 October 2017, or that the contact number stated in the Form 2 would have yielded useful information about the Intended R2, LCL would have likely been found to have materially contributed to the delay in the bringing of the proceedings against the Intended R2.   I find no such evidence.  In the circumstances, despite these questions over LCL’s handling of the matter, I am not inclined to the view that they have materially contributed to the delay.   

D.3　My view

39.  In conclusion, having regard to the relatively short delay, the failure of the Intended R2 to register the business which I have found most culpable for the delay, and the Employer’s breach of its statutory duty, I am satisfied that the applicant has provided “reasonable excuse” in accordance with s.14(4) ECO.

40.  After having overcome the hurdle under s.14(4), the applicant needs to deal with Mr Fan’s two other arguments in resisting the Summons, which I now address.

E.　“JOINDER TEST” GROUND

E.1　The alleged additional requirements

41.  In his first ground of opposition based on a proposition Mr Fan labelled as a “joinder test”, Mr Fan referred to O.15 r.4 and r.6 of RDC as the requirements for this test.  In attempting to explain this test, Mr Fan, in his skeleton (at para [10]), states as follows:

“Since [the applicant] now seeks to join [the] Intended R2 as a party by way of the Joinder Application under RDC O15 r4 (instead of commencing a fresh action), all the relevant considerations pertaining to an application for joinder of parties, including those under RDC O15 r6, become relevant and applicable. In short, [the applicant] has to satisfy the “joinder test” in addition to proving the reasonable excuse under ECO section 14(4)”.

42.  Mr Fan’s submissions are believed to have largely derived  from a decision of a Deputy District Judge in Tsui Man Kit Michael v Hung Lap Ming[4] , which Mr Fan referred to as “the seminal case”.  Referring to the approach the court in Tsui Man Kit Michael adopted, Mr Fan was emphatic in his submissions that the commencement of a fresh action against the Intended R2 would have been a better option for the applicant than taking out the Summons. It was stated by issuing a fresh action out of time, the applicant only needed to satisfy the s.14(4) ECO requirements whereas the applicant in this Summons would be required to overcome the additional other hurdles, one of which being the requirements stated in O.15 r.6(5)(a) and r.6(6). Hence, in his written skeleton, Mr Fan highlighted “instead of commencing a fresh action”, and the “joinder test”, the latter of which being additional requirement to s.14(4) ECO.

43.  Miss Lo took issue with Mr Fan on the “joinder test” requirements on the ground that the provisions of O.15 r.6(5) which Mr Fan relied only apply to a limitation period governed by the Limitation Ordinance, which does not apply to these proceedings.

E.2　Discussion

E.2.1　The test propounded in Tsui Man Kit Michael

44.  Since Mr Fan placed heavy reliance on Tsui Man Kit Michael in advancing his arguments on “joinder test”, I will begin with a brief discussion of this case. Tsui Man Kit Michael is also concerned with employees’ compensation proceedings. The subject application in that case was also similarly an application by the claimant to join a new party outside the 24-month limitation period with an exception that in that case the claimant had not served the joinder application on the party proposed to be joined.  The test for an out of time application to join a new party, according to the learned Deputy Judge (at paras [40] to [42]), consists of two requirements which an applying party needs to satisfy: (i) the requirements of joinder of party; and (ii) the requirements of s.14(4) ECO.

45.  Hence, apart from the requirements of showing “reasonable excuse” under s.14(4) ECO, the Deputy Judge in Tsui Man Kit Michael required additional requirements for “joinder of party”.  I am not clear what requirements the Deputy Judge was referring to, as they do not seem to have been spelt out in the judgment. It is evident that the Deputy Judge,  when coming to this view, was apparently under the impression that the Limitation Ordinance applied to employees’ compensation proceedings when he cited an obita dictum (see para 46 below) of the Court of Appeal  in Tsang Yu v Tai Sang Container Cold Storage & Wharf Ltd[5], which was concerned with the English statute, the Limitation Act, the English equivalent of the Hong Kong Limitation Ordinance.  

46.  Tsang Yu was a personal injuries action. The Court of Appeal dismissed an appeal by the defendant against a court’s refusal to strike out the plaintiff's statute-barred claim, which was a fresh claim the plaintiff only issued after having failed in his application to amend the writ of his earlier claim by adding the defendant. The passage of the Court of Appeal (para [34]) the Deputy Judge relied on is as follows:

“where a plaintiff seeks to claim against a new party at a time when the limitation period relevant such claim has plainly expired and the new claim does not come within the conditions prescribed by s.35(5)(b) of the Limitation Act, the proper course is to issue fresh proceedings against the new party rather than to attempt to amend subsisting proceedings against another party to add or substitute the new party as a defendant.”

47.  Since Tsang Yu is a personal injuries claim, its limitation period was therefore governed by the Limitation Ordinance, which provided for a period of 3 years to commence an action. Hence, the Court of Appeal’s reference in the passage to the commencement of a fresh action was made in the context of a very different statute of limitation, which does not apply to employees’ compensation proceedings. The Deputy Judge, with the greatest respect, had quoted Tsang Yu out of context.

48.  Hence, I do not agree with Mr Fan that Tsui Man Kit Michael is an authority which supports his submission that commencing a fresh action is a better course. In any event, I am unable to find any support from my reading of Tsui Man Kit Michael for the court’s view that starting a new action was a better option. All that I can find is a reference by the Deputy Judge to the court’s power to consolidate a new claim with the existing claim under O.15 r.4: see Tsui Man Kit Michael, para [50].  The institution of a fresh action is, in my view, not only inconsistent with the spirit of the underlying objectives of the Civil Justice Reforms of saving costs and of promoting procedural economy if a new party could be joined in the same proceedings, it is, more importantly, not in line with the spirit of the ECO regime of informality and simplicity so that employees’ compensation proceedings can be resolved speedily.

49.  In any event, as the reasoning of Tsui Man Kit Michael appears to be based on a statute which does not apply to employees’ compensation proceedings, I am therefore of the view that it cannot support Mr Fan’s proposition for an additional “joinder test” the applicant is allegedly required to satisfy in this Summons.

E.2.2　Are O.15 r.6(5)(a) and r.6(6) applicable

50.  Notwithstanding that Mr Fan has referred to O.15 r.4 and r.6(5)(a) and (6) as the requirements an applicant needs to fulfill, it is unclear what kind of requirements Mr Fan is referring to. As Mr Fan appears to focus his submissions on O.15 r.4 and r.6(5)(a) and (6), I need to discuss these provisions in greater detail.

51.  Mr Fan, rather than elaborating upon the requirements under these rules, seems to be rather wavering in his arguments. At first, Mr Fan in fact relied on the entire O.15 r.6(5) and (6). It was only when he was asked to clarify whether the Limitation Ordinance mentioned in r.6(5)(b) should apply to employees’ compensation proceedings, that Mr Fan stated that he was merely referring to O.15 r.6(5)(a) but not the entire sub-para(b).

52.  Irrespective of Mr Fan’s abandonment of his reliance on O.15 r.6(5)(b) that provides a specific reference to ss.27 and 28 of the Limitation Ordinance, he still, in my view, cannot escape the problem concerning the Limitation Ordinance. When he decided to only rely on O.15 r.6(5)(a) and (6) to circumvent the problem with the Limitation Ordinance, he had probably overlooked the fact that r.6(5) is bookended by a small paragraph that states ‘In this paragraph “any relevant period of limitation means a time limit under the Limitation Ordinance (Cap.347).”’ The reference to “any relevant period of limitation” is found in r.6(5)(a) as follows:

53.  Rule 6(5) provides that:

“No person shall be added or substituted as a party after the expiry of any relevant period of limitation unless either –

(a) the relevant period was current at the date when proceedings were commenced and it is necessary for the determination of the action that the new party should be added, or substituted, or…” (underlining is added).

54.  Following from O.15 r.6(5)(a) is r.6(6) that provides as follows: -

“The addition or substitution of a new party shall be treated as necessary for the purpose of r.6(5)(a), if, and only if the Court is satisfied that – [(a) to (e)[6]]”.

55.  As it is plain that O.15 r.6(6) is integral to r.6(5)(a), which provisions are concerned with the limitation period governed by the Limitation Ordinance, these provisions are hence clearly inapplicable to the ECO regime.

E.2.3　O.15 r.4, RDC

56.  In his submissions, Mr Fan also made brief reference to O.15 r.4 though he did not elaborate further on this rule or contend that the applicant had not fulfilled the provisions of this rule. Since this Summons was made pursuant to O.15 r.4, I should also determine whether the Summons is in line with this rule.

57.  Under O. 15 r.4, RDC, the joinder of parties is subject to two conditions: (a) the right to relief must in each case be in respect of or arise out of the same transaction or series of transactions; and (b) that there must be some common question of law or fact (see Hong Kong Civil Procedure 2018, Vol 1, para 15/4/1, p.330).

58.  Since the statutory framework of employees’ compensation does not provide for any procedure for the joining of a new party out of time, a party (as the applicant has done in the Summons) will need to invoke the appropriate provisions in the RDC, pursuant to s.21 ECO. This practice has been firmly established to be practical procedural mechanism to  fill in the gap of the statutory regime so long as it does not conflict with the existing statutory framework of the employees’ compensation proceedings[7].

59.  In this case, I am satisfied that the Summons has fulfilled the two requirements stated in para 57 above. First, the relief the applicant is seeking against the Intended R2 in the capacity of a principal contractor undoubtedly arose from the same transaction (the accident). Second, the issue of whether the Intended R2 should be held liable as the applicant’s principal contractor or in some other capacity is a common question of law or fact that needs to be determined at trial.

E.3　My view

60.  For the reasons above, I reject Mr Fan’s second ground of opposition.

F.　THE MERITS GROUND

61.  In this last ground of contention, Mr Fan suggested that the applicant’s intended claim against the Intended R2 is doomed to fail on the ground that the applicant has little evidence, apart from the allegation made by the Employer in the Form 2 that “Chiu Hing Kee” was the principal contractor, against the Intended R2.

62.  Miss Lo on the other hand submitted that this court should not be, at this stage, too concerned with the chance of the applicant’s success against the Intended R2 so long as the applicant could provide sufficient basis for joining the Intended R2.  The Form 2, Miss Lo stated, has provided sufficient basis for the joinder.  The issue as to whether the Intended R2 is the principal contractor, Miss Lo suggested, should be determined at trial.

63.  An employee does not have a direct employment relationship with a principal contractor. Hence, it is not uncommon that an employee does not know whether a principal contractor is involved or if there is, the principal contractor’s identity. The applicant in this case was exactly in such a situation. According to the evidence, the existence of the principal contractor was only revealed in the Form 2 the Employer submitted to the Labour Department.

64.  Despite the fact that the applicant presently has very little evidence against the Intended R2, I do not agree with Mr Fan that the evidence is so tenuous that the case against the Intended R2 is doomed to fail.  On the undisputed evidence, including the Intended R2’s own evidence, I consider that there is sufficient evidence indicating that the Intended R2 may be liable to the applicant as the principal contractor.

65.  Firstly, the Intended R2 is a business entity that is capable of being sued albeit it has not been registered.  In the affirmation filed in opposition to the Summons, the Proprietor admitted being the “sole proprietor trading as Chiu Hing Kee Eng. Co”.

66.  Secondly, the following evidence the Proprietor discloses in his opposition affirmation appears to be material to the issue of liability.

(i) The Proprietor knew the director of the Employer, Chu Kan.

(ii) Around the date of accident in September 2015, the Intended R2 was engaged by the same client as the Employer, a Miss Wat.

(iii) The place where the Intended R2 was engaged to carry out water pipes and drainage works was also the same place as the accident – a small house in Tze Tong Tsuen.

(iv) The Proprietor introduced Chu Kan of the Employer to Miss Wat to carry out non-water works in the same place as the accident, the small house.

67.  All in all, I do not agree with Mr Fan that the proposed claim against the Intended R2 is doomed to fail.

G.　CONCLUSION AND ORDER

68.  For the reasons above, I’m inclined to exercise my discretion to grant leave to the applicant to join the Intended R2 as the 2^nd respondent in these proceedings.

69.  I grant an order in terms of the Summons as amended as follows:

(1) Order in terms of para 1 save that the applicant is directed to effect the following amendments to the proposed “Amended Application” annexed to the Summons: -

(i) Deletion of para 2(e).  Since the question of leave is already disposed of at the hearing, the proposed para 2(e) is not required and should be deleted.

(ii) Making of corresponding amendments to para 3(3). The word “Respondent” in that paragraph should be amended to separately specify the respondents as the 1^st or (and) 2^nd respondent(s), as the case may be.

(2) The applicant shall file the Amended Application as amended in accordance with the directions in para (1) above within 14 days, and at the same time serve the same on the 1^st respondent (by registered post) and the 2^nd respondent.

(3) The 1^st and 2^nd respondents shall file and serve an Answer to the Amended Application within 21 days of the service of the Amended Application.

(4) There be a costs order nisi that the costs of the Summons be in the cause as between the applicant and the 2^nd respondent, with certificate for counsel.

(5) The costs order nisi shall stand absolute if no application is made to vary it within 14 days from the date of the handing down of this judgment.

(6) The applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

70.  I further order that: -

(1) The above order be drawn up in Chinese and submitted for the court’s approval within 5 days, which order shall be served on the 1^st respondent (by registered post) and the 2^nd respondent within 2 days of the sealing of the order.

(2) There be a Directions Hearing on 1 June 2018 at 10:30 am at Court no 26 of the District Court.

71.  Lastly, I thank Miss Lo and Mr Fan for their assistance.