Siu Chi Fai v. Gammon Construction Ltd

DCEC 139/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 139 OF 2015

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DECISION

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Introduction

1.The issue in this application is whether a valid settlement agreement has been concluded.

Background

2.The applicant worked as a welder for the respondent.  He suffered right ankle injury during his employment on 20 September 2014.  He commenced the present application against the respondent on 23 January 2015.

3.The applicant’s former solicitors, Messrs B Mak & Co. made a sanctioned offer by way of a letter dated 4 September 2015, inter alia,

“The Applicant will accept a round up sum of HK$104,400.00 (inclusive of interest but on top of the advance payment HK$105,473.62 already received by the Applicant) plus costs to be taxed in not agreed in full and final settlement of the whole claim under this employee’s compensation case.”

4.The same sanctioned offer was repeated in the applicant’s former solicitors’ without prejudice (save as to costs)[1] letter dated 11 September 2015.

5.By way of a third letter dated 14 September 2015[2] (“the Applicant’s Letter”), the applicant’s former solicitors wrote to the respondent’s solicitors, inter alia,

“..... our client will accept a round up sum of HK$108,900.00 (inclusive of interest and on top of advance payment received by the Applicant in a sum of HK$105,473.62). Please let us know if you will take the offer on or before 9^th October 2015.”

6.The respondent’s solicitors replied in an open letter dated 2 October 2015 (“the Respondent’s Letter”) as follows:-

“The Applicant’s offer to settle this matter in sum of HK$214,373.62[3] (inclusive of interest and advanced payment) plus costs to be taxed if not agreed as stated therein is hereby accepted.

As the amount of the advanced payment already received by the Applicant is in the sum of HK$153,265.92 (as per the copy enclosed) together with the sanctioned payment of HK$74,000.00 totalling [sic] HK$227,265.92 has already exceeded the Applicant’s said offer of HK$214,373.62, please let us have the draft Consent Order to conclude the above action.  Please include the direction to refund a sum of HK$12,892.30 to the Respondent out of the sanctioned payment of HK$74,000.00 and the interest on the sanctioned payment be paid out to the Respondent through our firm.”

7.On 13 October 2015, the applicant’s former solicitors wrote to the respondent’s solicitors and indicated the applicant required a further 14 days to consider the Respondent’s Letter.  On 16 October 2015, the applicant’s former solicitors claimed the Respondent’s Letter was a counter offer to the applicant’s sanctioned offer in the Applicant’s Letter, which rendered the sanctioned offer lapsed and no long be available for acceptance.

8.The parties did not finalise settlement and the matter was left in abeyance.

9.On 19 October 2015, the applicant’s former solicitors  informed the respondent’s solicitors that the case has been passed to Messrs Day & Chan, Solicitors for further handling.  Messrs Day & Chan  filed a “Notice of Change of Solicitors” on 23 October 2015.

The dispute

10.Ms Kong, solicitor for the respondent, maintained the Respondent’s Letter served as an acceptance of the sanction offer and a valid settlement has been concluded.  A summons was taken out on 19May 2016 for determination (“the Respondent’s Summons”).

11.Mr Chan, solicitor for the applicant opposed.  He submitted no settlement agreement has ever been concluded. The respondent did not accept the sanctioned offer in the Applicant’s Letter in its entirety but had varied some part of it. The applicant further blamed his former solicitors that the sanctioned offer in the Applicant’s Letter was made without his approval.

Discussion

12.I find there is a valid and binding agreement on settlement by way of the Respondent’s Letter for the following reasons.

13.The dispute arises from the computation of the advance payment made to the applicant at the time when the sanctioned offer in the Applicant’s Letter was made. As the applicant is expecting a net sum of HK$108,900 as compensation in this application, it is not surprising that he would be discontented when he learned the amount of advance payment made to him as at 2 October 2015 was HK$153,265.92 instead of HK$105,473.62, which means, he would receive an aggregate sum less than HK$108,900, a sum lesser than mere accepting of the sanctioned payment made by the respondent in sum of HK$74,000 on 25 August 2015.

14.Ms Kong submitted, as the applicant refused to finalise the settlement, the respondent has to pay the applicant advance payment in October 2015 as well. As at 21 October 2015, the respondent has paid the applicant an aggregate sum of HK$180,945.48[4]. The later the settlement is finalised, the less the outstanding balance would be. I agree with Ms Kong.

15.Even if the applicant’s argument is accepted, he deposed in his affirmation[5] that as at 28 August 2015, the respondent has already advanced HK$136,150.81 to him.  The sum was made up of all payments recorded in the applicant’s bank passbook. The significance is, the applicant (or his former solicitors) should have known the advance payment was more than HK$105,473.62 as at the date of the Applicant’s Letter.

16.Mr Chan was unable to explain how the sum of HK$105,473.62 was made up of in this hearing.  The applicant admitted he has no idea of the amount of advance payment made to him at all material times, he needs time to ascertain the exact figure of advance payment as all payroll records were with the respondent This is unpersuasive. It was the applicant’s own choice to offer the respondent settlement in light of HK$105,473.62 advance payment when the amount has not been ascertained.  The applicant could not have resiled from it.

17.If the applicant (or his former solicitors) was uncertain of the exact figure of advance payment, he (or his former solicitors) should have refrained from making the sanctioned offer as the way he did in the Applicant’s Letter, or simply replace the figure HK$105,473.62 with the phrase “the sum of advance payment made as at the date of this letter”.

18.The applicant must have accepted, as at the date of the Applicant’s letter, he has already received a sum more than HK$105,473.62.  The only explanation would be the applicant (or his former solicitors) was not alerted to the fact that the actual advance payment made by the respondent as at the date of the Applicant’s Letter was more than HK$105,473.62 but had still maintained such sum in the sanctioned offer in the same letter.

19.The latter part of the Respondent’s Letter was no variation of the sanctioned offer but a proposal to conclude the employees’ compensation application.  The settlement sum has been crystallized at HK$214,373.62 (HK$108,900.00 + HK$105,473.62), the respondent is entitled to set off the amount which has been made for compensation against the aggregate sum of HK$227,265.92[6] (both advance payment together with sanctioned payment HK$74,000.00) from the compensation agreed.

20.Ms Kong opted for the total advance payment as at 26 October 2015 in sum of HK$164,562.98[7], a sum which is lesser than the actual payment of HK$180,945.48.  I cannot criticize the respondent in making continuing advance payment to the applicant when the employees’ compensation has not been concluded by any means.  As a result of continuing advance payment, the net sum of compensation should have been depleted.

21.The applicant further blamed his former solicitors for making a sanctioned offer in the Applicant’s Letter without his approval. I agree with Ms Kong, should it be the case, the applicant should seek redress from his former solicitors.

Conclusion

22.I allow the respondent’s application and make the following orders:-

(i)     On a without admission of liability basis, the applicant’s claim in this application be settled at HK$214,373.62 plus costs, to be taxed if not agreed.

(ii)    Credit be given to the payment already received by the Applicant in sum of HK$164,562.98.

(iii)   The respondent do pay the balance of the settlement amount in sum of HK$49,810.64 to the applicant through his solicitors, Messrs Day & Chan within 28 days hereof.

(iv)   The sanctioned payment made by the respondent on 25 August 2015 in sum of HK$74,000.00 be paid out to the respondent through its solicitors, Messrs. Cheng, Yeung & Co. forthwith.

(v)    Interest accrued, if any, on the said sanctioned payment of HK$74,000.00 be paid out to the respondent through its solicitors, Messrs Cheng, Yeung & Co. forthwith.

(vi)   The costs of this application up to 2 October 2015 be paid by the respondent to the applicant, to be taxed if not agreed.

(vii)  The costs of the respondent’s summons filed on 19 May 2016 be paid by the applicant to the respondent, to be taxed if not agreed.

Mr I Chan, of Day & Chan, for the applicant

Ms Kong Kin Man, of Cheng, Yeung & Co, for the respondent