Kaur Paramjit v. Li on Na t/a 新長發快餐 and Others

DCEC 1479/2012

[2019] HKDC 1077

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1479 OF 2012

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Before: Her Honour Judge Levy in Chambers (Open to Public)

Date of Hearing: 25 June 2019

Date of Decision: 15 August 2019

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DECISION

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A. BACKGROUND FACTS

1.Mdm Kaur’s employees’ compensation proceedings have a chequered history.  For easy understanding, I extract the background facts set out in the “Reasons for Decision” of this court dated 15 November 2018.

“[1] Mdm Kaur, the applicant in these employees’ compensation proceedings, allegedly met an accident on 5 January 2012 whilst she was working in a restaurant called San Cheung Fast Food (“Restaurant”), which was believed to have been owned by Li On Na (“Mdm Li”). Before the expiry of the two years’ limitation period provided by s.14 of the Employees’ Compensation Ordinance, Mdm Kaur, through her then legal-aid solicitors, brought these proceedings on 23 August 2012 against Mdm Li trading as San Cheung Fast Food.

[2] Mdm Kaur obtained a default interlocutory judgment and a final judgment respectively on 15 February and 17 October 2013 in default of Mdm Li’s appearance.

[3] After Mdm Li made an application to apply to set aside the default judgments, the Employees Compensation Assistance Fund Board applied to be joined as the 2^nd respondent, and to set aside the default judgments.

[4] It was Mdm Li’s assertion that she ceased to be the owner of the Restaurant as from 11 November 2011 after she sold the Restaurant business to Mdm He Xiao Ying (“Mdm He”) by a transfer of business agreement. Since the alleged accident happened after she sold the Restaurant to Mdm He, Mdm Li strenuously denied that she was the employer.

[5] On 28 September 2016, I handed down a decision (“Decision”) setting aside the default judgments.

[6] On 10 May 2017, the Director of Legal Aid discharged Mdm Kaur’s legal aid certificate. Mdm Kaur then became privately represented until 4 December 2017 when she acted in person.

[7] On 30 November 2017, whilst still privately represented, Mdm Kaur filed a summons together with a supporting affirmation for leave to join out of time a new party - He Xiao Ying trading as San Cheung Fast Food - as the 3^rd respondent in these employees’ compensation proceedings. “He Xiao Ying” (Mdm He), according to Mdm Li’s assertion, was the alleged new owner of the Restaurant.”

2.Unless expressly stated, the same nomenclature used in the above will be adopted in this Decision. 

3.Shortly after the 3rd respondent was ordered to be joined in these proceedings on 23 October 2018, the 3rd respondent, on 2 January 2019, made a sanctioned payment.  On 24 January 2019, Mdm Kaur’s present solicitors filed a “Notice of Acceptance of Sanctioned Payment” (“Notice of Acceptance”).  By summons filed on 14 February 2019 (“Summons”) pursuant to s 18A of the Employees’ Compensation Ordinance and O 32 of the Rules of the District Court (“RDC”), Mdm Kaur applied, among other things, for the payment out of the sanctioned payment and for costs. 

4.Mdm Kaur filed her 2nd and 3rd affirmations (respectively “Kaur’s 2nd” and “Kaur’s 3rd”) in support of the Summons and in reply to Mdm He’s affirmation (“He’s 2nd”) filed in opposition to the Summons.  The Board remained neutral and filed no evidence.

5.At the hearing, Mdm Kaur was no longer represented by her Legal-aid assigned solicitors, Messrs. Massie & Clement (“Former Solicitors”), but was privately represented by Mr Sun, the Board was represented by Mr Li, and the 3rd respondent by counsel, Mr Pako Chan.  Mdm Li, despite having been served with the Summons, did not respond to the Summons and was absent from the hearing. I proceeded to hear the Summons in Mdm Li’s absence.

B. THE SUMMONS

6.In the Summons, Mdm Kaur seeks the following orders: -

“(a) The Sanctioned Payment in the sum of HK$134,624 made by the 3^rd Respondent on 2^nd January 2019 be paid out to the Applicant through the Director of Legal Aid;

(b) The 3^rd Respondent do pay all the Applicant’s costs of this action against the 1^st to 3^rd Respondents, including this Summons, to be taxed if not agreed;

(c) Upon full payment of the Applicant’s costs as mentioned in paragraph 2 hereinabove, the 3^rd Respondent shall be fully discharged and released from any and all further liabilities in respect of the Applicant’s claims under this action; and

(d) Leave to the Applicant to discontinue this action against the 1^st and 2^nd Respondents, and the 3^rd Respondent do pay the 1^st and 2^nd Respondents costs of this action, including this Summons, to be taxed if not agreed.”

7.Paragraph (a) of the Summons, leave for the payment out of the sanctioned payment, is not controversial. Apart from agreeing to pay part of the Board’s costs set out in the consent summons in the following paragraph, Mdm He strenuously contests paras [b] and [d] of the Summons regarding costs liability.

8.By a consent summons Mdm Kaur filed on 5 June 2019, the parties, with the exception of the 1st respondent who is not a party to the consent summons, agreed that: -

“(a) The 3^rd Respondent do pay the 2^nd Respondent’s costs of these proceedings from 30^th November 2017 up to the date of the order to be made including the costs of this application, to be taxed if not agreed”

9.Paragraph [a] of the consent summons was ordered at the hearing. Despite their agreement that the Board is entitled to its costs before 30 November 2017, Mdm Kaur and Mdm He however dispute liability for these costs. Hence, I need to determine the remaining costs of the Board (“Board’s Remaining Costs”) from 21 July 2016 to 29 November 2017 (i.e. from the date of the Board’s summons to be joined as the 2nd respondent to the date before Mdm Kaur’s summons to join the 3rd respondent).

C. ISSUES

10.The issues of the Summons are: -

(1)  First, Mdm Kaur’s costs of this action (Issue 1).

Mdm He only agrees to pay Mdm Kaur’s costs from 23 October 2018, the date she became a party to these proceedings, but disputes her liability before that date.

(2)  Second, Mdm Li’s costs (Issue 2).

Mdm Li only made her first appearance in her application to set aside the Default Judgments. After the Default Judgments were set aside, Mdm Li’s involvement was minimal. Her costs seem to have only been limited to the costs Mdm Li was ordered by this court on 28 September 2016 to pay to the Board on its application to set aside the Default Judgments. This costs order would have enabled Mdm Li to recover the costs she has been adjudged to pay to the Board only if judgment had been given in her favour.  However, upon this court granting Mdm Kaur leave to discontinue the proceedings against her, Mdm Li should be entitled to have these costs paid by Mdm Kaur upon the discontinuance of the action unless this court otherwise orders (see Section F below). The issue for these costs should therefore be whether:

(i) The 1st respondent should be allowed these costs, if so,

(ii) Whether Mdm He, instead of Mdm Kaur, should be ordered to bear Mdm Li’s costs.

(3)  Third, the Board’s Remaining Costs (Issue 3). 

It is agreed between Mdm Kaur and Mdm He that the Board is entitled to these costs.  The only issue is who should be the party liable for the costs.

D. LEGAL PRINCIPLES: FOR ACCEPTANCE OF SANCTIONED PAYMENT

11.Since Issue (1) concerns the costs of Mdm Kaur upon the acceptance of sanctioned payment, it is necessary to firstly outline the governing principles.

D.1  Parties’ submissions

12.It was submitted on behalf of Mdm Kaur that the costs consequences of acceptance of sanctioned payment set out in RDC O. 22 r. 20, apply in the present case.  Pursuant to r. 20, Mr Sun stated, Mdm Kaur is entitled to, unless the court otherwise orders, her costs of the proceedings up to date of the Notice of Acceptance (which would have been 24 January 2019).

13.Mr Chan however contended that O. 22 r. 18(4), not r. 20, is applicable.  Hence, the “otherwise proviso” in r. 20 Mr Sun relied on did not apply to this case.

D.2 Discussion

14.Order 22 Part III, rules 15, 17, 18 and 19, governs the procedure for the acceptance of sanctioned payments. Rule 20 that Mr Sun relied on is provided in Part IV of O. 22 under the heading “Consequences of Sanctioned Offer or Sanctioned Payment”. To understand the mechanism of the procedure, it will be convenient to set out below the relevant parts of these provisions as follows:

“Time for acceptance of defendant’s … sanctioned payment (O. 22, r. 15)

(1) Subject to rule… 10(2)[1], a plaintiff may accept … a sanctioned payment made not less than 28 days before the commencement of the trial without requiring the leave of the Court if he files with the Court and serves on the defendant a written notice of acceptance not later than 28 days after … payment was made.

(2) …

(3) …

(4) A notice of acceptance of a sanctioned payment must be in Form No. 24 in Appendix A.

Payment out of a sum in court on acceptance of sanctioned payment (O. 22, r. 17)

Subject to rules 18(4) and 19 and Order 22A, rule 2[2], where a sanctioned payment is accepted, the plaintiff may obtain payment out of the sum in court by making a request for payment in Form No. 25 in Appendix A.

Acceptance of … sanctioned payment made by one or more, but not all, defendants (O. 22, r. 18)

(1) This rule applies where the plaintiff wishes to accept … a sanctioned payment made by one or more, but not all, of a number of defendants.

(2) If the defendants are sued jointly or in the alternative, the plaintiff may accept the … payment without requiring the leave of the Court in accordance with rule 15(1) if—

(a)he discontinues his claim against those defendants who have not made the … payment; and

(b)those defendants give written consent to the acceptance of the … payment.

(3) If the plaintiff alleges that the defendants have a several liabilities to him, the plaintiff may—

(a)accept the … payment in accordance with rule 15(1); and

(b)continue with his claims against the other defendants.

(4) In all other cases the plaintiff shall apply to the Court for—

(a)an order permitting a payment out to him of any sum in court; and

(b)such order as to costs as the Court considers appropriate.

Other cases where court order is required to enable acceptance of sanctioned offer or sanctioned payment (O. 22, r. 19)

(1) Where … a sanctioned payment is made in proceedings to which Order 80, rule 10 (Compromise, etc., by person under disability) applies—

(a)… payment may be accepted only with the leave of the Court; and

(b)….

(2) Where the Court grants leave to a plaintiff to accept … a sanctioned payment after the trial has commenced—

(a) the money in court may not be paid out except in pursuance of an order of the Court; and

(b) ….

(3) Where a plaintiff accepts a sanctioned payment after a defence of tender before action has been put forward by the defendant, the money in court may not be paid out except in pursuance of an order of the Court.

(4) Where a plaintiff accepts a sanctioned payment made in satisfaction of—

(a) a cause of action under the Fatal Accidents Ordinance (Cap. 22) and a cause of action under Part IV or IVA of the Law Amendment and Reform (Consolidation) Ordinance (Cap. 23); or

(b) a cause of action under the Fatal Accidents Ordinance (Cap. 22) where more than one person is entitled to the money,

the money in court may not be paid out except in pursuance of an order of the Court.

Costs consequences of acceptance of defendant’s sanctioned offer or sanctioned payment (O. 22, r. 20)

(1) Where a defendant’s sanctioned offer or sanctioned payment to settle the whole claim is accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date of serving notice of acceptance, unless the Court otherwise orders.

(2) …

(3) ….” (Emphasis added.)

15.There is no dispute that the Notice of Acceptance was served within the 28 days’ time limit provided in O.22 r.15 for the acceptance of the sanctioned payment. Hence, unless the leave of the court under rules 18(4) and 19[3] was required, Mdm Kaur would have been entitled, pursuant to O.22 r.17, to obtain a payment-out by filing a Form No.25.

16.Despite Mr Sun’s reliance on O.22 r.20 that no leave was required, Mdm Kaur however indeed did not file a Form 25 for payment out even though she would not have been prohibited by r 19 from having done so. Hence, Mdm Kaur’s issuing of the Summons, in my view, tends to suggest that Mdm Kaur had been prohibited from issuing the Form 25. The only prohibition is in r 18(4). 

17.In my view, O 22 r 18(4) clearly applies to this case. Firstly, rule 18(1) applies as there is more than one respondent in these proceedings, and the sanctioned payment was only made by one (the 3rd respondent), but not all, of the respondents. Secondly, the present case is neither a case of the respondents being sued in the alternative nor the respondents having several liabilities to her. Thus, the criteria set out in rule 18(2) and (3) that permit the acceptance of a sanctioned payment without the leave of the court are not fulfilled here.  Accordingly, the request for the payment out of the sanctioned payment is subject to r 18(4). 

18.In the circumstances, I agree with Mr Chan’s argument that O 22 r 18(4) applies.  Mdm Kaur cannot pray in aid the “costs consequences provision” in O 22 r 20.  Accordingly, the court has an unfettered discretion in relation to costs.

E. ISSUE (1): MDM KAUR’S COSTS OF THIS ACTION

19.As already discussed in Section D, the usual costs consequences of the acceptance without leave do not apply.  Mdm He relies on the conduct of Mdm Kaur in contending that she should not be liable for Mdm Kaur’s costs of the proceedings before she was made a party to the proceedings on 23 October 2018, particularly the extra costs occasioned by Mdm Kaur having wrongly sued the 1st respondent.

20.Mdm Kaur however submits that she has been conducting the proceedings reasonably and is entitled to her costs.

E.1 The 3rd respondent’s position

E.1.1 Mdm Kaur knew Mdm Li was not her employer when commencing the proceedings

21.In support of her contention that she should not be liable for Mdm Kaur’s costs before she was joined as the 3rd respondent, Mdm He averred that Mdm Kaur and the Former Solicitors knew at all material times that Mdm Li was not the employer. In support of her contention, Mdm He alluded to a number of matters in He’s 2nd.

22.First, Mdm Kaur was re-hired on 17 December 2011 by Mdm He personally after the latter interviewed Mdm Kaur. Mdm He also stated that Mdm Kaur knew from the beginning of the re-hiring that the name of the Restaurant was not San Cheung Fast Food but “Loi Loi Hotpot Restaurant” (“Loi Loi”). In Mdm Kaur’s witness statement ([5]) dated 14 March 2013 prepared for the trial for the assessment of compensation, Mdm He suggested that Mdm Kaur had already alluded to the name of Loi Loi.

23.Second, when Mdm Kaur met with the Accident, not only was Mdm He, who was at the Restaurant premises at the time, notified of the Accident, Mdm He also personally asked Mdm Kaur about her injury and arranged for her to rest before she was sent to the hospital by ambulance.

24.Third, after Mdm He received the sick leave certificates personally from Mdm Kaur inside the Restaurant premises, Mdm He also issued and personally gave to Mdm Kaur two cheques drawn on a personal joint account in the name of herself and “Choy Kwan Yin” (Mdm He’s ex-husband) for the payment of Mdm Kaur’s periodical payments for the months of February and March 2012.

25.Fourth, Mdm He, after having submitted a Notification of Accident in Form 2 to the Labour Department, also wrote two letters (respectively in Chinese and English) to Mdm Kaur. In both letters, Mdm He provided her mobile phone number and asked Mdm Kaur to contact her for the arrangement of a medical examination and settlement of the employees’ compensation.  Mdm Kaur never contacted Mdm He.

E.1.2  Former Solicitors failed to make proper inquiries

26.In He’s 2nd, Mdm He, referring to Mdm Li’s allegations in her application to set aside the Default Judgments that the Former Solicitors knew of the transfer of the Business in having been provided with a copy of the transfer agreement as early as in 2012, stated that the Former Solicitors had not acted diligently by conducting proper inquiries or contacting Mdm He. It is suggested that had they contacted Mdm He, it is more likely than not that she would have settled the matter with Mdm Kaur in 2012.

E.1.3  Mdm Li’s neglect of the proceedings

27.It was contended that Mdm Li was also at fault in two material respects: Firstly, Mdm Li had failed to attend to or inform Mdm He of the proceedings despite having been served with them in 2012.  Secondly, Mdm Li neglected to update the particulars of the business registration of the Business after the transfer agreement.

28.Mr Chan therefore contended that Mdm Li should also be held liable for the long delay in updating the business registration of the Business. It was not until 18 September 2013 that the notification of amendment of the address of the Business was given, which was more than 2 years after the transfer of Business (on 15 November 2011).

E.2 Mdm Kaur’s stance

29.Mdm Kaur advanced two reasons in support of her argument that Mdm He should pay the costs of the entire action.

30.First, Mdm He, as Mdm Kaur’s employer, should be liable for Mdm Kaur’s costs.    In Kaur’s 2nd, Mdm Kaur averred that she should not be faulted for having wrongly sued Mdm Li. It is reasonable, Mr Sun submitted, for the Former Solicitors to have relied on the information disclosed in a business search of the Restaurant Business to have sued Mdm Li, who was still shown to be the sole-proprietor of the Business when the present employees’ compensation proceedings were commenced on 23 August 2012. In support, Mdm Kaur exhibited (as “KP-2”) a copy Certified Extracts of Information on the Business Register of “San Cheung Fast Food” dated 6 March 2019 (“BR Record”) to Kaur’s 2nd.  Mdm Kaur stated that in fact the BR Record disclosed that Mdm Li “was always registered as the owner of the Restaurant until cessation of the Business on 31 March 2018” (Kaur 2nd: [9]). 

31.Secondly, due to Mdm He’s non-compliance with s 8 of the Business Registration Ordinance (Cap 310) that requires a person carrying on a business to notify the Commissioner of Inland Revenue of any change in the particulars of a business within 1 month of such change, Mdm He should be liable for all the extra costs.  Despite the admitted change of ownership of the Restaurant Business from Mdm Li to Mdm He on 11 November 2011, Mdm He, Mr Sun submitted, “never registered herself as the owner of the Business Registration Office after the transfer of the business”.

E.3 Discussion

32.In my Decision dated 28 September 2016 (“Setting Aside Decision”) setting aside the Default Judgments, I had already highlighted several pieces of evidence that corroborated Mdm Li’s assertion that she was not the employer. A substantial part of the evidence in fact was the same evidence that Mdm He has put forward in support of her arguments discussed in E.1 above. It is therefore convenient to re-visit the said evidence that I discussed in the Setting Aside Decision.  

“[15] …The relevant parts of A’s Statement they refer to can be summarized as follows:

(i) Since 2007 until early 2011 the applicant worked on and off as a dishwasher in a restaurant called “Loi Loi Hotpot Restaurant” at the Premises.

(ii) On 17 December 2011, the applicant was re-employed to work in the same hot-pot restaurant at the Premises. All the staff in the restaurant were also newly hired by a boss “Miss Li”.

(iii) During the time of the applicant’s employment to work at the Premises, including the re-employment in December 2011, the name of the hot-pot restaurant was not changed although it seemed to have been “managed by … different people”.

C.3 Evidence after the applicant’s injury

C.3.1 The employer’s notice of Accident to the Labour Department dated 18 May 2012 (“Form 2”)

[16] The authorized signature of the Business on Form 2 appeared to be the same signature as that of Mdm He in the Agreement. Thus, this signature, it is submitted on behalf of Mdm Li and the Board, tends to support Mdm Li’s proposed answer that she was not the employer at the time of the Accident, who was likely to have been Mdm He.

C.3.2 Two cheques respectively dated 6 February 2012 (“February Cheque”) and 7 March 2012 (“March Cheque”) (collectively “Cheques”)

[17] The Cheques were disclosed as item 5 in the applicant’s LOD, which are described as “[c]opies of cheque(s) received by the Applicant as a periodical payment made by her employer”. The Cheques, it is stated, showing payments having been made to the applicant after the Accident, were issued and signed by Mdm He and an unknown person, but not Mdm Li, further provide credible evidence that Mdm He was likely to have been the applicant’s employer at the time of the Accident.

C.3.3 Two unsigned letters purportedly from the applicant’s employer to the applicant

[18] These two letters, one being hand-written in Chinese dated 31 May 2012; and another in English dated 11 June 2012, are both addressed to the applicant. The letters are stated to be from the person-in-charge of Loi Loi Hotpot Restaurant, which was stated to be the applicant’s employer. The contents of the letters seem to be an inquiry about the applicant’s injuries and an arrangement for her to be medically examined. The one thing that counsel suggested showed Mdm He to have likely been the applicant’s employer, rather than Mdm Li, was a contact telephone number stated in these letters, which is the same telephone number as that of Mdm He as recorded in the Agreement.

[26] Thirdly, a number of post-Accident documents also seem to lend further support to Mdm Li’s assertion that the Business had been validly transferred to Mdm He and that Mdm Li was not the applicant’s employer after the transfer.

(i)  Regarding the authorized signature of the Business on Form 2, I am unable to agree with Mr Massie that it is totally illegible. Although some of the characters may not be immediately discernable, I would say that anyone who reads Chinese characters should be able to discern the very distinctive character, “賀”, which is the surname of Mdm “He” (“賀”). Also, a naked-eye visual comparison of this signature with that of Mdm He’s in the Agreement seems to have also disclosed a striking likeness of these two signatures.  Form 2 is a prescribed form by which an employer is statutorily required to give notice to the Labour Department of the accident of the former’s employee. The authorized signature that bears the resemblance to that of Mdm He’s, in my view, helps bolster Mdm’s Li proposed defence that Mdm He was the applicant’s employer after the Business had been transferred to her.

(ii)  The Cheques respectively in the sums of $6,480 and $7,248, in my view, seem to further exculpate Mdm Li’s liability.  In spite of the fact that there was another unknown issuer of the Cheques, the fact that Mdm He was one of the named joint issuers who made payments (by the Cheques) that have been described in the LOD as periodical payments received from the applicant’s employer is pertinently in support of Mdm’s Li proposed defence.”

33.The above extracts show that at the time of the commencement of the proceedings, Mdm Kaur and the Former Solicitors already had evidence showing that Mdm Li was not the employer. The reasons are as follows.

34.First, Mdm Kaur knew that the name of the Restaurant was not San Cheung Fat but Loi Loi, and that it was Mdm He, not Mdm Li, who re-hired her.

35.Mdm Kaur’s witness statement was already referred to by Mdm He and in the Setting Aside Decision [15]. In the witness statement Mdm Kaur alleged that she had worked in a restaurant named Loi Loi and that she was re-hired on 17 December 2011 by “the boss Miss Li”.

36.In the evidence Mdm Kaur filed for this Summons, Mdm Kaur seems to have back-peddled on these assertions and shifted the responsibility to the Former Solicitors.

37.Without any reason given for the change of her evidence, Mdm Kaur is now alleging (in Kaur’s 3rd [3]) that she only came to know the name “Loi Loi” allegedly from the Former Solicitors who had learned of the change of name “from other sources”.

38.Mdm Kaur assertions about the re-hiring by Miss Li made in the witness statement were firm assertions without any reservations.  However, this certainty has now, without any explanation, given way to doubt.  Mdm Kaur is now alleging that the woman who re-hired her might be the “superior / shop manager” of the restaurant where she met the Accident and that she could not confirm whether she was in fact Mdm He (Kaur’s 3rd [5]). Since it is not in dispute that Mdm Kaur had in fact worked on-and-off for Mdm Li for a number of years before the re-hiring, I find Mdm Kaur’s said evidence in an attempt to provide an explanation for her change of evidence totally implausible.

39.Mdm Kaur’s witness statement was verified by her signed statement of truth. Hence, she is deemed to have an honest belief in the truth of the assertions made in the witness statement. Mdm Kaur’s volte-face however has cast doubt on the truthfulness of the assertions regarding the identity of the employer.  

40.Secondly, in spite of her assertion that she had collected the February Cheque and March Cheque payments [Setting Aside Decision [17]] not directly from Mdm He, but from “a male employee” (Kaur’s 3rd [10]), Mdm Kaur nonetheless admitted to having received two periodical payments. Implicitly, she must have known that the periodical payments were paid by Mdm He as Mdm He was one of the account-holders of the said cheques.

41.Thirdly, regarding the two letters Mdm He wrote to Mdm Kaur about the arrangement for a medical examination (see the Setting Aside Decision [18]), Mdm Kaur also admitted to the receipt of these two letters, but gave an excuse for not responding to Mdm He’s request by shifting the responsibility to the Former Solicitors.  It was averred that due to her lack of English or Chinese language skills, she passed the letters to the Former Solicitors, who allegedly advised her that there was no need to reply (Kaur 3rd [11]).

42.In the circumstances, it is wholly inappropriate, in my view, for Mdm Kaur and the Former Solicitors to shut their eyes to the obvious, that the employer was Mdm He but not Mdm Li. They have acted unreasonably by taking advantage of the inaccurate information disclosed in the BR Record to find a case against Mdm Li. 

43.Given the blatant conflicts between the information disclosed in the BR Record with the identity of the owner of the Restaurant, I find it most inexplicable that the Former Solicitors had not taken time to investigate the identity of the owner, and instead hastily commenced the proceedings only 7 months after the Accident when the 24 months’ limitation had another 17 months to run. 

44.In the circumstances, I reject Mr Sun’s submission that Mdm Kaur had no knowledge that Mdm Li was no longer the employer at the time of the Accident. Mdm He’s criticisms of the conduct of Mdm Kaur and the Former Solicitors are valid, and therefore should be taken into account in the exercise of my discretion.

45.In the exercise of my discretion, I have also taken into account the extent of Mdm He’s responsibility due to her non-compliance with s 8 of the Business Registration Ordinance. Mdm Kaur, as the claiming party, bears the burden of proving her claim against a party she claims against.   I do not consider that Mdm He’s failure to register her restaurant business upon the transfer of Mdm Li’s Business to her can justify Mdm Kaur’s unreasonable conduct.

46.For the reasons stated above, it is my conclusion that had Mdm Kaur properly brought the claim against Mdm He from the beginning, these proceedings would have likely been disposed of by settlement without incurring the extra costs caused by claiming against the 1st respondent. I therefore do not consider it just to make Mdm He pay for the costs up to the date of the service of the Notice of Acceptance. 

47.Before deciding whether I should disallow all of Mdm Kaur’s costs before 23 October 2018 as Mr Chan contended, I ought to consider the likelihood of whether these proceedings would have been issued at all had Mdm Kaur correctly pursued Mdm He in the first place. Having regard to the relatively small sum of advanced payment of $13,728 [4] Mdm Kaur  received compared to the total compensation Mdm He paid by way of sanctioned payment $134,624, I believe that these proceedings would have likely in any event been issued against Mdm He. In the circumstances, I consider it fair to order Mdm He to pay the costs of and occasioned by the institution of the proceedings up to the first directions hearing on 15 February 2013, and I so order.

F.   LEGAL PRINCIPLES FOR ISSUES (2) AND (3)

48.Issues (2) and (3) concern the costs of Mdm Li and the Board upon the granting of leave to Mdm Kaur to discontinue the proceedings against them.  Mr Chan, citing Yip Chi Ho v 黃啓德 & Ors[5] , a District Court decision, stated that Mdm Kaur bears the burden in showing that it was reasonable for her to sue the 1st respondent and the Board before the court should consider exercising its discretion to make Mdm He liable for the costs of the co-respondents.

49.Mr Sun, referred to Fung Chun Man v Hospital Authority[6] on the principles governing the making of a Sanderson (or a Bullock)order (see Fung Chun Man at para [5]), submitted that the court should make a Sanderson order ordering Mdm He to pay the co-respondents’ costs. This is because, Mr Sun submitted, Mdm Kaur has demonstrated that it was reasonable for her to sue Mdm Li. As for the Board, the reasonableness of its involvement is, it was further suggested, not in dispute. Mr Sun therefore urged this court to accept that Mdm Kaur has succeeded in displacing the usual costs liability.

50.Mr Chan quoted para [7] of Yip Chi Ho in support of his contention of requiring Mdm Kaur to establish reasonableness “to sue the discontinued” respondents in this case before she should be allowed to avoid the usual costs liability against her. Paragraph [7] of Yip Chi Ho is in fact taken from a passage of a High Court decision of “Li Kai Yin v Atla Trans Ltd & Anor (HCPL 196/2009)”.  Two typos are however found to have appeared in the quotation of the “Li Kai Yin” case:  first, the defendant’s name “Atla Trans Ltd” should be “Atta Trans Ltd”; and second, the case number of “HCPL 196/2009” should be “HCPI 196/2009” (Errors are underlined).  Yip Chi Ho is the decision of Bharwaney J concerning similar costs issues as the instant case.

51.As the passage Mr Chan relied on in Yip Chi Ho is a direct quotation from Li Kai Yin, I consider that it is more appropriate for this court to defer to Li Kai Yin. Upon a careful reading of Li Kai Yin, I do not think that the passage Mr Chan quoted (from Yip Chi Ho) regarding costs liability of a plaintiff towards other defendants when accepting sanctioned payment and proceeding to discontinue a claim against them represents the general principles.  The passage only provides a guidance as to the proper course a plaintiff should take when faced with a situation similar to the one Mdm Kaur is facing. In my view the general principle is found in another passage as follows:

“[15] The general rule is that a defendant is entitled to costs when an action is discontinued: see Inchroy Credit Corporation Ltd v Cheung Man-cheung [1992] 1 HKLR 120, Trend Publishing (HK) Ltd v Vivien Chan & Co (a firm) [1996] 2 HKLR 227 and Terkildsen v. Barber Asia Ltd. HCA 1963/2003, 6 June 2007. That general rule will be applied where the discontinuance constitutes a recognition by the plaintiff of likely defeat. But there may well be cases where justice requires the defendant to recover its costs from the plaintiff, even when the plaintiff has discontinued the proceedings for reasons other than the certainty or likelihood of defeat. But that is not an absolute rule. The rules recognise that there may be circumstances in which a plaintiff should be permitted to discontinue an action without having to pay the defendant's costs. An example of such a case is one where the case has been discontinued because the issue has become academic rather than by reason of an acknowledgment by the plaintiff of defeat or likely defeat. However, to award costs to a plaintiff would be a very substantial departure from the general rule.”

52.Accordingly, the general principle is that the applicant (Mdm Kaur) should pay the costs of the discontinued respondents (Mdm Li and the Board) upon discontinuance of the proceedings unless she can satisfy this court that there are circumstances that clearly justify the departure from the general principle.  

53.Applying these legal principles to the facts of this case, I do not agree with Mr Sun that this court should make a Sanderson order by ordering Mdm He to pay the costs of Mdm Li and the Board.  My reasons are as follows.

G.  ISSUE (2): COSTS OF MDM LI

G.1  Whether Mdm Li should be allowed costs

54.According to the discussion in Issue (1), the reason why Mdm Li was brought to the proceedings was solely due to the failure of Mdm Kaur and the Former Solicitors to carry out a proper investigation as to the identity of the employer.  As discussed above, Mdm Kaur’s bringing of the claim against Mdm Li is not only unreasonable, but worse still, it constitutes an abuse of the process by her deliberate choosing, out of expediency, to sue a wrong party.

55.Mr Sun had not advanced any new arguments for this issue, but only repeated his submission on Mdm He’s non-compliance with s 8 of the Business Registration Ordinance.

56.It was pointed out by Mr Chan that Mdm Li had incurred no costs after the Setting Aside Decision by which the costs of the setting aside applications of the Default Judgments were already disposed of.  Mdm Li had not participated in the proceedings afterwards. He therefore submitted that the appropriate costs order should be no order as to costs.

57.First of all, I agree with Mr Chan on Mdm Li’s responsibility.  Based on the particulars disclosed in the BR Record, Mdm Li had been extremely dilatory in updating the business records of her former Business.  According to the BR Record, Mdm Li did not in fact give notification of the cessation of the Business until 31 March 2018, approximately 7 years after the transfer of Business.  Her dilatoriness has provided Mdm Kaur with an opportunity to frame a case against her.  In the circumstances, I do not consider it just to allow Mdm Li’s costs.  In any event, Mdm Li has not appeared on this Summons to seek costs.  In the circumstances, I consider that the proper costs order for Mdm Li should be no order as to her costs, and so order.

H.  THE BOARD’S REMAINING COSTS

58.For the liability for the Board’s costs before 30 November 2017, Mr Sun advanced the same reasons (that Mdm He failed to register her restaurant business after becoming the owner and that the involvement of the Board was reasonable). As the entitlement as to the Board’s Remaining Costs is not in dispute (see [9] above), Mr Sun’s second reason is superfluous.

59.Mr Chan however contended that it would be unjust to order Mdm He to pay the Board’s Remaining Costs. Mr Chan argued that the Board’s Remaining Costs should be jointly paid by Mdm Kaur and Mdm Li due to the lack of reasonable diligence discussed in Sections E and G above.  

60.In Section E above, I have considered that Mdm Kaur and the Former Solicitors had acted unreasonably.  The same consideration should be applied here. Analogously therefore, the Board’s intervention was caused by the unreasonable haste and the lack of care of Mdm Kaur and the Former Solicitors in having brought the proceedings against the wrong party, Mdm Li.  Had these proceedings been properly commenced, it would not have been necessary for the Board to intervene.  In the circumstances, I consider that the liability for costs should be borne by Mdm Kaur alone. 

61.In the circumstances, I order Mdm Kaur to pay the Board’s Remaining Costs.

I.  CONCLUSION AND ORDER

62.For the reasons stated above, I grant the following orders: -

(1)  For para (a) of the Summons, leave be granted for the payment out to the applicant through the Director of Legal Aid of the sanctioned payment in the sum of $134,624.

(2)  For para (b) of the Summons, the 3rd respondent do pay (apart from the costs the 3rd respondent has agreed to pay the applicant after 23 October 2018) the applicant’s costs of these employees’ compensation proceedings up till the date of the first directions hearing on 15 February 2013, which costs are to be taxed if not agreed; and thereafter there shall be no order as to the costs.

(3)  For para (d) of the Summons, leave to the applicant to discontinue this action against the 1st and 2nd respondents with:

(i)  No order as to costs for the 1st respondent;

(ii)   An order that the applicant do pay the 2nd respondent’s costs between 21 July 2016 to 29 November 2017 (the other costs having been agreed), which costs are to be taxed if not agreed.

(4)  For para (c) of the Summons, there shall be an order in terms as amended with the amendments to be carried out in accordance with the order made in (2) and (3) above.

(5)  For the costs of the Summons, an order nisi that the applicant shall pay the costs of the Board and the 3rd respondent, which costs are to be taxed if not agreed.  Any application for the variation of this costs order nisi shall be made by summons within 21 days, failing which the order shall become an absolute order.

(6)  The applicant’s own costs before the discharge of the Legal Aid Certificate shall be taxed in accordance with the Legal Aid Regulations.

J.  PERSONAL LIABILITY OF THE FORMER SOLICITORS FOR COSTS

63.In the discussion above, I form the view that the suing of the wrong party against Mdm Li has been the fault of both Mdm Kaur and the Former Solicitors.  I consider it fair to apportion the responsibility between them and hence am inclined to make a wasted costs order under O 62 r 8, RDC against the Former Solicitors by: -

(a)  disallowing 50 percent of the costs between the Former Solicitors and Mdm Kaur; and

(b)  ordering them to repay 50 percent of Mdm Kaur’s cost which Mdm Kaur has been adjudged to pay the Board.

64.Before I make a wasted costs order, I need to, as required by O 62 r 8, give the Former Solicitors a reasonable opportunity to attend a hearing to give reasons why I should not make the order.

65.Before giving directions for the hearing, I will direct my clerk to send a copy of this Decision to the Former Solicitors who should within 14 days of the receipt of this Decision, propose in writing the procedure for the hearing.

66.As the Former Solicitors are legally assigned solicitors, I also direct my clerk to serve a copy of this Decision on the Director of Legal Aid.

67.I wish to thank Mr Sun, Mr Li and Mr Chan for their assistance.

Mr Michael P Sun of Yu Sun Yau Mak & Lawyers for the applicant

The 1st respondent was not represented and did not appear

Mr Frederich D Li of Gallant for the 2nd respondent

Mr Pakco Chan, instructed by Fung Wong Ng & Lam LLP Solicitors, for the 3rd respondent