Chak King Por v. Wong Chun Fai and Others

Read the full judgment text of HCPI 14/2013 on BabelCite. This High Court CFI judgment was delivered on 12 April 2016.

1. At the trial on 16 February 2016, the 1 st defendant and the 2 nd defendant being absent, and after hearing the plaintiff’s evidence and submissions from his Counsel Mr Eric Shum, I gave final judgment in favour of the plaintiff (“ P ”) on liability against the 1 st and the 2 nd defendants (respectively “ D1 ” and “ D2 ”), and awarded P damages plus interests totaling HK$3,698,040.58.  After deducting the amount of employee’s compensation already received by P, the balance was HK$3,182,902.25

Cited by 7 cases · Cites 3 cases

Case No.HCPI 14/2013[2016] 2 HKLRD 1076
Court
High Court CFI
Date12 Apr 2016
Judge
Case Document
100%Judiciary

HCPI 14/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 14 OF 2013

_________________________

BETWEEN
CHAK KING POR Plaintiff
  and  
  WONG CHUN FAI 1st Defendant
INTROWELL MANAGEMENT LIMITED 2nd Defendant
  EMPLOYEES COMPENSATION ASSISTANCE FUND BOARD 3rd Defendant

_________________________

Before: Hon B Chu J in Court
Date of Hearing: 17 February 2016
Date of Decision: 12 April 2016

______________________________

DECISION ON COSTS

______________________________

Introduction

1.At the trial on 16 February 2016, the 1st defendant and the 2nd defendant being absent, and after hearing the plaintiff’s evidence and submissions from his Counsel Mr Eric Shum, I gave final judgment in favour of the plaintiff (“P”) on liability against the 1st and the 2nd defendants (respectively “D1” and “D2”), and awarded P damages plus interests totaling HK$3,698,040.58.  After deducting the amount of employee’s compensation already received by P, the balance was HK$3,182,902.25.  P had voluntarily limited the quantum sought to HK$3m.  Costs were ordered against the D1 and D2 jointly and severally.

2.As for the 3rd defendant (“Fund Board”), after mediation, it had reached a settlement with P and agreed to quantum of HK$3m.  The Fund Board did not contest liability.  P had sought an order that the Fund Board should pay his costs, jointly and severally with D1 and D2.  This was opposed by the Fund Board, and the question of costs as against the Fund Board was then adjourned to the following day for argument.

The Jurisdictional Issue

3.Counsel for the Fund Board Ms Susanna Leong has raised an issue as to whether this court has jurisdiction to award P’s costs against the Fund Board in common law proceedings where the Fund Board has applied to join as a party in the proceedings.

4.Ms Leong has referred the court to Bharwaney J’s judgment in Kwan Kam Pui v Fung Man & Others HCPI 18/2012, 30 May 2014.

5.I note in the opening paragraph of his judgment in Kwan Kam Pui, Bharwaney J had referred to an earlier case Lau Yuk Hung v Tsang Kwong Ming & Ors [2013] 2 HKLRD 614 in which he had expressed his misgivings at the then state of affairs, namely the result of the amendment of the provisions of the Employees Compensation Assistance Ordinance, Cap 365 (“ECAO”) in 2002, under which injured persons,who were unable to recover payment from their employer would be required, nevertheless, to prove their claim for common law damages in court and to incur the costs of proving their case in court, before they could claim payment from the Fund Board (referred to as ECA Fund Board in Kwan Kam Pui).  However, when they claimed payment from the Fund Board after obtaining such judgment, they would then be told that the Fund Board would not be liable to pay interest on the damages that had been awarded and, more surprisingly, that the Fund Board would not be liable to pay the costs incurred in proving their case in court and obtaining that judgment against the employer.

6.As Bharwaney J had said, this was a catch 22 situation: the injured employee could not get payment from the Fund Board unless he obtained a judgment from court but he would not be reimbursed for the costs incurred in obtaining that judgment.  The net result would be any damages that were awarded would be reduced by the amount of the costs incurred to obtain that judgment, which could run into a few hundred thousand dollars.

7.In Kwan Kam Pui, the plaintiff and the Fund Board had reached a settlement with no order as to costs.  However, the amount of costs was substantial which meant that the net settlement sum would be reduced accordingly.

8.Due to his misgivings, Bharwaney J invited submissions from parties on, in particular, the following questions:

(i)  the question of the Court’s jurisdiction, if any, to make an order of costs against the Fund Board in cases where it has intervened as an additional party in proceedings for common law damages;

(ii) whether any such jurisdiction includes discretionary power to order the Fund Board to pay costs incurred before its intervention and, if so, in what circumstances ought such power to be exercised.

9.After considering the history of ECAO, and the detailed submissions made by the Fund Board’s Senior Counsel Mr Horace Wong, Bharwaney J concluded that upon his review and construction of the ECAO, its provisions would not impact on nor curtail the court’s wide jurisdiction under section 52A of the High Court Ordinance, Cap 4, to award costs against parties, intervening parties, and non-parties.  The Learned Judge had reviewed previous decisions made by courts in Hong Kong, but was of the view that those decisions would not lead him to depart from his conclusion.

10.In the present case, Ms Leong submitted on behalf of the Fund Board that the conclusions reached by the Learned Judge in Kwan Kam Pui were obiter and in particular, urged this court not to follow the “guidelines” set out by Bharwaney J in Kwan Kam Pui in paragraphs 66 and 67 of his judgment (“Guidelines”).

11.The Guidelines were as follows[1]:-

“66. In my judgment, the usual order should be made against the ECA Fund Board, as is made against an employer defending the proceedings against whom a judgment for damages has been obtained. Such usual order is to pay the entire costs of the action, not just costs from the date of the intervention by the ECA Fund Board, in cases in which the ECA Fund Board has intervened and disputed liability and quantum or has obtained an order to set aside interlocutory judgment for damages to be assessed in order to dispute liability and quantum. The taxation of such costs would ensure that any costs and expenses which were unreasonably incurred would not be allowed on the taxation. The costs of necessary steps taken to prosecute a claim to judgment ought to be recoverable in a case in which the ECA Fund Board intervenes to dispute liability, even though those steps were taken before its intervention. Interested parties such as insurance companies and MIB who join in the proceedings and obtain an order to set aside a default judgment that had been regularly obtained are usually made to the plaintiff’s costs in obtaining such judgment. A similar order should be made when the ECA Fund Board joins in the proceedings and obtains an order to set aside a regularly obtained default judgment.

67.  Where the ECA Fund Board intervenes in order to dispute the injured employee’s claim on quantum only, then the usual order ought to be the one made by Master Lung, as he then was, in Lau Tuen Ping v Law Wai Kwong and Anor,namely, that the ECA Fund Board ought to pay the costs of the proceedings from the date of its joinder.”

12.The Employees Compensation Assistance Scheme (“the Scheme”) was first set up under the ECAO on 1 July 1991 (“1991 Ordinance”). The background leading to the setting up of the Scheme has been set out in the Legislative Council Brief in February 2002 (“2002 LegCo Brief”)when the Employees Compensation Assistance (Amendment) Bill 2002 was introduced (“2002 Amendments”).  As explained in the 2002 LegCo Brief, the Scheme is to provide payment to injured employees who are unable to receive their entitlements for employment-related injuries from the employers or insurers after exhausting legal and financially viable means of recovery, and also provides for the protection of employers against default of their insurers who become insolvent.  The Scheme is administered by the Fund Board, which holds the Employees Compensation Assistance Fund (“Fund”) upon trust.

13.The Fund is financed by a levy on the premium of employees’ compensation insurance policies issued for the purpose of the Employees’ Compensation Ordinance (Cap 282) to cover employers’ liabilities arising from employment-related injuries, which levy rate for the Fund Board at the time of the 2002 LegCo Brief was 1%, which had remained the same since its inception in 1991.

14.As seen in the written submissions of Mr Wong SC in Kwan Kam Pui which were quoted and adopted by the Learned Judge[2], at the time of its enactment, the 1991 Ordinance provided for full compensation where the employee concerned had satisfied all the conditions for recovery, and pursuant to the original statutory scheme, the Fund Board was required to make payment to eligible employees the full amount of employees’ compensation as defined under the Employees Compensation Ordinance Cap 282 and common law damages, and both were treated in the same fashion under the 1991 Ordinance.  In particular sections 16 and 23 included costs incurred by an applicant as part of the amount payable by the Fund Board.  However, the Scheme under the 1991 Ordinance was reviewed extensively between 2000 and 2002 predominantly by reason of the financial difficulties that plagued the Fund Board at the time.

15.Further, as seen in the 2002 LegCo Brief, a rescue package was proposed, which included (I) Package of Reform Measures for the Scheme; (II) Adjustment of Levy Rates; (III) Government Loan[3].

16.In particular, under the above mentioned (I), there were measures proposed in respect of the following:

(A)  Relief Payment in lieu of Common Law Damages

(B)  Revising the Interest Rate

(C)  Role of the Fund Board in Legal Proceedings

(D)  Revising the Procedures for Claims

(E)  Surcharge on Employers

(F)  Employees Compensation insurance Insolvency Scheme

17.Ms Leong has drawn the court’s attention, in particular, to the following:

(i)  Under (A) above[4], it was proposed that a “relief payment” should be payable under the Scheme in lieu of common law damages, and the proposed relief payment shall not exceed the aggregate sum of damages as awarded by the court and shall not cover any costs arising from proceedings in respect of damages (emphasis added) (“Relief Payment”).

(ii) Under (C) above[5], it was stated in the 2002 LegCo Brief that

“At present, the Ordinance does not explicitly empower the Board to defend claims in legal proceedings. This places the Board in a disadvantaged position because defaulting employers are usually absent in the legal proceedings leaving the claims undefended. It is proposed that where a proceeding has been initiated to make a claim in connection with a work-related accident, the Board may apply to the Court to be joined in the proceedings as a party and defend the claims”.

18.Ms Leong’s submissions are mainly based on s 20B (3) of the EACO.  Sections 20A-G were bought in under the 2002 Amendments. Section 20A sets out the application by employee etc for Relief Payment from the Fund in relation to unpaid damages.  Under s 20A(1), an eligible person who is unable to recover from an employer payment of an amount of damages for which the employer is liable may apply for a Relief Payment. Section 20A (2) then states :

“For the purposes of this section, an employer is not to be regarded as liable for the payment of an amount of damages unless the amount is payable pursuant to a judgment or order of a court of competent jurisdiction in Hong Kong.” (emphasis added)

19.Section 20B(3) further states that notwithstanding the definitions of “compensation” and “damages” for the purposes of determining the amount of a Relief Payment, (a) any interest payable on any amount and (b) any costs arising from proceedings in respect of any damages of compensation claim shall not be included.

20.Section 20B(3) was considered by Bharwaney J in Kwan Kam Pui.  As the Learned Judge has said, the Scheme under Part IV of the ECAO is largely self-contained.  He made references also to sections 21 and 24 of the ECAO, namely that an applicant who is dissatisfied with the determination of the Fund Board under section 22 may commence proceedings in court against the Fund Board by writ.  The Learned Judge has said that on his construction, there is nothing in those provisions governing the Scheme for Relief Payments that impacts on the court’s discretion to award costs in actions brought by injured employees to recover damages for personal injuries.  Further, the Learned Judge pointed out that the statutory definition of a Relief Payment, which excludes costs incurred to obtain a judgment, does not impact on or, otherwise, affect the court’s general, and very wide, powers to award costs in common law proceedings for damages for personal injuries[6].

21.Ms Leong has referred this court to Tu Zhiqiang and Hap Sang Co (a firm) CACV 107 of 2011 and argued that the Fund Board intervenes in proceedings under s 25A of ECAO in contemplation of its potential liability to make a Relief Payment under s 20A, and that the Fund Board is not a defendant against whom a plaintiff may enter judgment directly.

22.Section 25A sets out the circumstances when the Fund Board may apply to the court to join in the proceedings as a party in accordance with Order 15 rule 6 of the RHC or RDC, as the case may require, to take over the defence as if it were the employer in the proceedings.

23.Bharwaney J also has considered sections 25, 25A and 25B, and 29 of the ECAO and Tu Zhiqiang in his judgment.  The Learned Judge has said that a judgment cannot be entered against the Fund Board does not prevent the court from ordering the Fund Board to pay costs of the action which it has joined as an interested party, and he has set out his reasons in his judgment, which I will not repeat here, save to say I agree.

24.Ms Leong has argued that ordering costs to be paid by the Fund Board in proceedings in which it has intervened would be grossly unfair to those employees who make applications for the Relief Payment after obtaining judgment against their employers in proceedings with the Fund Board’s intervention, and she submitted that under section 20B(3), the Fund Board does not have to pay the costs of the plaintiffs in legal proceedings if it merely sits back and only investigates the matter after the proceedings have been prosecuted to the end. 

25.This argument had again been put forward  before Bharwaney J[7] and the Learned Judge had set out his reasons for disagreeing, which again I will not repeat here, save to say I agree with his reasons.

26.Ms Leong has submitted that the Fund Board may be deterred from intervening in proceedings because of the concern for costs may have profound adverse impact on public interest:

(i)   More fraudulent claims or collusion may succeed by reason of the lack of defence rendering the Fund Board more vulnerable to such fraudulent claims;

(ii)  More claims with exaggerated figures may succeed by reason  of the lack of intervention by the Fund Board thereby diminishing the funds available to honest and deserving applicants;

(iii) Many more cases may have to be prosecuted by employees to the very end without the Fund Board’s intervention and settling worthy cases at an early stage.

27.In my view, if the court has wide powers to make costs orders against the Fund Board in cases where the Fund Board has intervened, it will also have powers to make costs order in favour of the Fund Board in those above circumstances as set out by Ms Leong.  As Ms Leong herself has submitted, part of the legislative package introduced by the 2002 Amendments is to encourage/facilitate the Fund Board to intervene in proceedings both for the purpose of contesting unmeritorious case and also to have potential claims against the Fund Board settled early before substantial costs are incurred in legal proceedings.  In my view, there is no reason why costs orders cannot be made in favour of the Fund Board and against a plaintiff who has an unmeritorious claim or has unreasonably refused to settle.

28.As pointed out by Bharwaney J in Kwan Kam Pui, whether   the Fund Board has applied to join in under s25A(a), (b) or (c), the Fund Board is unlikely to be restricted in its participation in the proceedings and that the Fund Board may be entitled to defend the proceedings on liability as well as on quantum[8].  There could well be cases in which the Fund Board has joined in as a party, and the net result of the plaintiff in trying to obtain a judgment may end up with the damages awarded being substantially reduced or even wiped out by the costs incurred in obtaining the judgment, if the court has no jurisdiction to order costs against the Fund Board.  As I have pointed out during the hearing, this would in fact be contrary to the objective in setting up the Fund to provide Relief Payments to the plaintiff.

29.Having considered the provisions of ECAO, and notwithstanding Ms Leong’s submissions, I have come to the same conclusion as Bharwaney J in Kwan Kam Pui, that there is nothing in the provisions of ECAO to impact on or curtail the court’s wide jurisdiction under section 52A of the High Court Ordinance, Cap 4.

30.As for the Guidelines, I do not think that the Learned Judge in stating what he did in paragraphs 66 and 67 was laying down any definitive guidelines.  The Learned Judge has already made it clear that the court has a wide discretion on the award of costs under s 52A of the High Court Ordinance against parties, intervening parties and non parties.  In my view, each case will depend on its own circumstances, and the discretion of the court is unfettered.

Exerciseof Discretion

31.Ms Leong has submitted that if this court does not agree with the Fund Board on the jurisdiction issue, then the appropriate award in the present action is that there should be no order as to costs in that the Fund Board’s participation in the present case has all along been reasonable and necessary.

Chronology of relevant events

32.Ms Leong has prepared a detailed chronology of events to assist the court.  I set out some of the relevant events hereunder.

33.The Notice of Proceedings pursuant to s 25B(1) of the ECAO, a copy of the Writ of Summons herein and the Notice to Insurer were first served on the Fund Board on 10 January 2013, as well as on the motor insurance company.

34.On 18 January 2013, the motor insurance company’s solicitors Munros wrote to clarify, among other things, the identity of the insured, which according to the insurance policy (“Policy”) was a company called Decorlinks Ltd and not D2, and also pointing out that the exception clause of the Policy would apply, as P’s injury arose out of and in the course of P’s employment.

35.The Fund Board instructed their solicitors Gallant Y T Ho & Co to write to Munros on 28 January 2013 and seeking clarification of the relationship between the insured Decorlinks and, among others, D2 and P, and they also wrote to P’s solicitors seeking further information and documents, and, among other things, requested P’s solicitors to refrain from entering judgment against Ds without giving reasonable notice to them in writing.

36.On the same day, Munros replied to state that at the time of the accident the subject vehicle was hired out by Decorlinks Ltd to D2 for use such as goods deliveries, and that D1 and P were co-workers both employed by D2.

37.On 4 February 2013, P’s solicitors provided certain information and documents requested by the Fund Board, and also informed the Fund Board’s solicitors that D1 had failed to file an acknowledgment of service and gave notice to the Fund Board that P intended to obtain judgment against D1.

38.However, on 22 February 2013, the Fund Board’s solicitors sent a letter to P’s solicitors informing the latter that they were taking the Fund Board’s instructions and again requested P’s solicitors to refrain from entering judgment against Ds in the meantime.

39.D2 had filed an acknowledgment of service through its solicitors Messrs Joseph Leung & Associates on 21 January 2013 and filed its defence on 7 March 2013, in which D2 admitted that both P and D1 were D2’s employees.

40.On 12 March 2013, the Fund Board’s solicitors wrote to P’s solicitors, stating that it was premature for the Fund Board to consider a joinder application at that stage in light of the several issues raised by the Fund Board, and that they considered it “not appropriate” for P to enter judgment against D1, and one of the issues being investigated by the Fund Board at that time was whether D2 was the employer of P.  The Fund Board’s solicitors also wrote to D1 directly on 13 March 2013 to request him to contact them.

41.P’s solicitors then sent a letter to the Fund Board’s solicitors on 27 March 2013 enclosing a copy of D2’s defence in which D2 had admitted that both P and D1 were D2’s employees, and further stating that D2 was P’s employer at the time of the accident and enclosing P’s wages payee vouchers and P’s MPF statement.  

42.Thereafter there were further correspondence and on 9 April 2013, the Fund Board’s solicitors wrote to P’s solicitors indicating that they were still investigating the accident and the indemnity issue under the Policy and again asked that P to withhold entering judgment against D1. 

43.On 30 April 2013, the Fund Board obtained a statement directly from D1, in which D1 had stated that D2 had never asked D1 to sign any salary statement, nor did D2 contribute to any MPF on behalf of D1, nor were any employer’s salaries tax returns filed for D1, and that although D2 had admitted being D1’s employer, D2 had not contacted him in relation to the present action.

44.The Fund Board’s solicitors sent a copy of D1’s statement to P’s solicitors on 2 May 2013, and among other things suggested that P should seek specific discovery from D2 to substantiate the employer-employee relationship and also stating again that it was not appropriate for P to enter judgment against D1 at that stage in light of the Policy issue raised by the insurers.

45.In response to the above, P’s solicitors had in a letter of 7 May 2013 pointed out to the Fund Board’s solicitors that although D1 said he did not know and had never heard of name of D2, D1 had said he was employed to drive the subject vehicle, and that it was not really disputed that P was employed by D2 at the time of the accident and assigned to work in the subject vehicle, and that the subject vehicle was driven under direction of D2 at the time.  In any event, P’s solicitors agreed to write to D2’s solicitors to seek specific discovery as suggested by the Fund Board’s solicitors.

46.On 22 May 2013, D2’s solicitors replied indicating among other things that D2 was being cooperative and further pointed out that D2 had admitted that there was an employer-employee relationship between D1 and D2, and therefore they declined any further specific discovery.

47.Thereafter on 3 June 2013, the Fund Board’s solicitors decided to write to D2’s solicitors seeking further information and documents in relation to the employment of D1.

48.In the meantime, on 10 June 2013, Munros had written to the Fund Board’s solicitors enclosing various documents including a letter dated 15 March 2012 from D2 to Munros confirming that D1 was hired as a casual driver on the day of accident of D2 as driver and authorised to drive the subject vehicle at the time of the accident.

49.On 5 July 2013, D2’s solicitors had written to indicate that D2 was willing to admit liability and asked P’s solicitors to send them a draft consent order.

50.However, on10 July 2013, the Fund Board’s solicitors wrote to D2’s solicitors indicating that they considered there was nothing to suggest that D1 was employed by D2 at the time of the accident and that D1 had denied the same, and that D2’s admission of liability had no basis, and that the Fund Board would reserve its right to hold D2 and/or its director wholly liable for any loss and damage which the Fund Board might suffer as a result of D2’s wrongful admission.

51.In light of what the Fund Board had indicated, D2’s solicitors took further instructions and wrote on 26 August 2013 to confirm, among other things, that D1 was hired as a casual driver in self-employed capacity by D2 and there was no employment relationship between D1 and D2, and indicated that they would seek leave to amend D2’s defence accordingly.  They however reiterated that D1 was hired by D2 to drive the subject vehicle whether there was an employer-employee relationship or not and asked whether the Fund Board had any objection to D2 admitting liability.

52.On 2 September 2013, the Fund Board’s solicitors replied stating, among other things, without having seen the amendments to the defence, they were not in a position to express any further view.

53.This was followed by D2’s solicitors sending their proposed amendments to the defence on 17 September 2013 and asked again whether the Fund Board had any objection to D2’s intended admission of liability, giving a deadline for the Fund Board to reply failing which D2 would proceed to admit liability without further notice.

54.On 2 October 2013, the Fund Board’s solicitors wrote and asked D2’s solicitors to clarify again the basis of D2’s admission of liability. This led to D2’s solicitors replying on 29 October 2013 indicating D2 would withhold admission of liability.

55.Thereafter the action then carried on in its normal course.

56.D2 was granted leave to file its amended defence on 12 November 2013, which was then followed by the Check List Review. 

57.A mediation conference was held between P and D2 on about 8 February 2014 but no settlement was reached between P and D2. It was not clear as to whether no settlement was reached over liability or over quantum, or both.

58.On 27 February 2014, P filed his amended statement of claim to include a pleading that D1 was an agent or servant of D2 and was instructed to drive the subject vehicle at the time of the accident.  P also filed a Revised Statement of Damages seeking a net sum of about HK$5.4m.

59.On 17 July 2014, D2’s solicitors came off record and since then D2 had not been legally represented, nor had it really participated in these proceedings.  On 11 September 2014, the Fund Board applied to intervene and was granted such leave on 17 September 2014. The Fund Board’s solicitors had written to P’s solicitors on 30 September 2014 indicating they applied to intervene to protect the interest of the Fund Board, and asked P to refrain from entering interlocutory judgment against the Fund Board notwithstanding its intention not to contest the proceedings herein.  No defence was filed by the Fund Board.

60.Thereafter, the joint medical assessment took place between the expert nominated by P and the expert nominated by the Fund Board.

61.On 16 February 2015, the Fund Board filed its Answer to the plaintiff’s Revised Statement of Damages setting out that the net sum payable to P should be about HK$2.36m if both the functional prosthesis and cosmetic prosthesis were allowed or if only the cosmetic prosthesis allowed, then a net sum of about HK$956,000.  

62.P and the Fund Board attended mediation on 1 April 2015 and a settlement agreement on quantum was reached by them on the same day.

63.P entered interlocutory judgment against D1 on 26 May 2015.

64.On 17 November 2015, the Fund Board’s solicitors had written to P’s solicitors stating that the Fund Board would not be disputing liability, and that they should not be liable for P’s costs in these proceedings.

65.The trial eventually took place on 16 February 2016.

Discussion

66.It would appear from the correspondence that although the Fund Board’s solicitors were informed by Munros on 28 January 2013 that the subject vehicle was hired out by the insured of the Policy, namely Decorlinks Ltd to D2 for goods deliveries, it was in fact hired out to another company Introwell Transportation Limited which had a common shareholder with D2, namely Mr Wong Ching Ho.  Mr Wong was also the sole director of the two companies which shared the same registered address.  In any event, that D1 was authorised or directed to drive the subject vehicle at the time of the accident was not really disputed by P, D1 or D2 throughout these proceedings.

67.D1 never filed an acknowledgment of service or a defence to deny that he was negligent in driving the subject vehicle.  In my view, interlocutory judgment could have been entered into by P against D1 in early 2013, if not for the Fund Board repeatedly asking P to refrain from doing so.

68.It would appear from the correspondence that in March 2013, the Fund Board’s solicitors were querying whether P was employed by D2 at the time of the accident. I accept that it was reasonable for the Fund Board to make enquiries and investigate whether P was employed by D2 since only an injured employee in an employment–related injury would be an “eligible person” for an application for Relief Payment under section 20A of ECAO.  However, one would have thought that by end of March 2013, upon receipt of P’s MPF statements and salaries payee vouchers, there really should not be any further issue on P being an employee of D2 at the time of the accident and that he was injured in the course of his work for D2. 

69.In respect of the issue as to whether D1 was employed by D2 at the time of the accident, D2 seemed all along accepted that D1 was its employee. 

70.I accept that it was through the Fund Board’s enquiries and by the Fund Board obtaining a statement from D1 that it transpired that D1’s case was that he was working as a part time driver, and he was hired through a friend, and paid in cash.  D1 had said that there was no MPF paid for him and no tax returns filed for him, nor was he asked to sign any salaries payee vouchers by D2.  However, although D1 said he had not heard of the name of D2 , he did not seem to have knowledge as to who exactly employed him. He did say he was hired through a friend and was authorised or directed to drive the subject vehicle at the time of the accident.  

71.Ms Leong argued that back in 2013, the only capacity of D1 pleaded in the statement of claim was that D1 was an employee of D2 and therefore on that basis, D2 would only be vicariously liable for D1’s negligence if it was D1’s employer, but the enquiries carried out by the Fund Board’s solicitors showed that D1 was not an employee of D2 and thus D2 would not be vicariously liable for D1’s negligence.   

72.Even though at that time P’s pleaded case was that D2 was vicariously liable for D1’s negligence as D1’s employer, this would not mean D2 could only be vicariously liable in such a capacity.  After being made aware of what D1 had said in his statement to the Fund Board, Ps’ solicitors had in their letter of 7 May 2013 pointed out that it was not disputed that D1 said he was employed to drive the subject vehicle and that the subject vehicle was driven under direction of D2 at the time.

73.It thus would seem to be clear that whether D1 was employed by D2 or not, D1 was hired as a driver at the time of the accident and he was authorised or directed to drive the subject vehicle by D2 in carrying out the work he was hired to do.

74.This was also pointed out by D2’s solicitors in their letter of 26 August 2013 and they made it clear that D2 wanted to admit liability. 

75.It was obvious that as early as 2013 and up to September 2013, neither D1 nor D2 had any intention to contest liability.  Ms Leong argued that the Fund Board had never contested D1’s liability on the ground that he was not negligent or that P was contributory negligent, and that the request for P to refrain from entering interlocutory judgment against D1 and D2 had to be viewed in the context of the Fund Board’s solicitors’ enquiries into whether D1 was an employee of D2.

76.Although the Fund Board was entitled to carry out enquiries as it considered necessary under section 21(2) of ECAO, and to carry out its own investigation as to whether D1 was an employee of D2, as I have said the evidence showed that neither D1 nor D2 had ever denied that D1 was hired as a driver and authorised /directed by D2 to drive the subject vehicle, or that D2 was vicariously liable for D1’s negligence, nor did the Fund Board’s enquiries indicate otherwise.

77.In my view, the Fund Board took an unnecessarily technical and narrow approach to the matter, as a result of which P was deterred from entering interlocutory judgment against D1 until after P’s settlement with the Fund Board, and further P was prevented from reaching a consent order with D2 on D2’s admission of liability latest by about 17 September 2013.  Thereafter, the action had to proceed in its normal way to trial with P having to prove liability against D2.  After D2’s solicitors dropped out of picture, the only real participants in the proceedings were P and the Fund Board.  The trial did not take place until about 18 months later, and unnecessary costs were being incurred by not only P, but also by the Fund Board, in addition to the delay in P obtaining his payment.

78.There was no evidence of any attempt on the part of the Fund Board after D2’s solicitors’ letter of 17 September 2013, and knowing the then stance of D2, to try and achieve an early settlement of the action by either suggesting mediation with P or making any without prejudice offers to P.  In fact, mediation between the Fund Board and P only took place on 1 April 2015 and the settlement came too late as by then the trial could not be dispensed with.

79.Having considered all the correspondence and the chronology of events, I have come to the view that the Fund Board’s conduct has not been reasonable and that the Fund Board should be responsible for P’s costs as from 17 September 2013 onwards, including the hearing on costs.  I am of the view that there should be no order as to costs up to and including 17 September 2013.  P’s own costs are to be taxed in accordance with Legal Aid Regulations.

80.Finally, I would express my gratitude to both counsel for their helpful submissions.

(Bebe Pui Ying Chu)
Judge of the Court of First Instance
High Court

Mr Erik Shum, instructed by ONC lawyers, assigned by Director of Legal Aid, for the plaintiff

The 1st defendant and 2nd defendant were not represented and did not appear

Ms Susanna Leong, instructed by Gallant Y T Ho & Co, for the 3rd defendant



[1] See paras 66 & 67, Kwan Kam Pui

[2] at para 22, pg 11, Kwan Kam Pui

[3] Paragraphs 10-27, pgs 3-7, 2002 LegCo Brief

[4] See paras 11, 12

[5] See para 17

[6] At para 25

[7] See para 46

[8] At para 37

Other Judgments in This Case

Further hearings and rulings under HCPI 14/2013