Yip Lai Heung v. 伍炳榮 and Others
Read the full judgment text of DCEC 1252/2016 on BabelCite. This District Court judgment was delivered on 11 May 2023.
1. This is the applicant’s application by summons dated 13 July 2022 to vary the costs order nisi .
Cited by 4 cases · Cites 2 cases
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DCEC 1252/2016 [2023] HKDC 595 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION EMPLOYEES’ COMPENSATION CASE NO 1252 OF 2016 ------------------------
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---------------------------------------- 1st DECISION ON COSTS ---------------------------------------- 1.This is the applicant’s application by summons dated 13 July 2022 to vary the costs order nisi. 2.In this decision I will adopt the same abbreviations used in the judgment herein handed down on 29 June 2022 after a 6-day trial (“the Judgment”). There is another costs matter which is dealt with by my 2nd DECISION ON COSTS handed down together with this decision. 3.The applicant sustained injury on 4 December 2014 when he was engaged as a casual worker and while performing the Demolition Work along with R1 and R2. 4.There were but minor disputes among all parties regarding the quantum. This court awarded the applicant employees’ compensation in the total sum of HK$256,465. 5.The issues on liability were rendered rather intricate. 6.When the Application was issued on 17 June 2016, the applicant claimed only against R1 and R2 in that either R1 and/or R2 was his employer; or alternatively, he was employed by R2, a sub-contractor of R1, the principal contractor. On 1 August 2018, the Application was re-amended to also claim against R3 and R4. It was amended to claim that either R1 and/or R2 and/or R3 and/or R4 was his employer, and alternatively, that R1 and/or R2 was/were the contractor of the principal contractor, being R1 and/or R3 and/or R4. 7.Initially, both R1 and R2, apart from putting the applicant to proof, pleaded that the Trio together as “partners” were engaged as self-employed persons by R3. R2 by amendment made on 30 July 2018 of his Answer further pleaded that if the applicant was an employee, he was employed by R3 or R4. More than a year later on 17 September 2019, R1 also re-amended his Answer and made the same further plea as R2. 8.In the Amended Answer of R3 and R4, they pleaded essentially a complete non-admission/denial and also reliance on the Proviso in the Ordinance (section 2(1)(b)). At trial, R3 and R4 also ran the case that it was R4 who had contracted the Demolition Work to R1, or, as a fallback, that it was R4 who was the employer of the applicant. 9.In the Judgment, I held against all other scenarios and found that R3 was the employer of the applicant (and R1 and R2) and was liable. I also found against R3’s reliance on the Proviso. 10.At trial, 4 sets of counsel and legal teams represented respectively, the applicant, R1, R2 and R3 and R4. The applicant, R1 and R2 were legally aided, while R3 and R4 were not. 11.It can be readily surmised that the total amount of legal costs spent by all the parties were multiple times (potentially more than 10 times) that of the award. This is alarmingly and disturbingly disproportionate. 12.In paragraph 120 of the Judgment, based on my provisional view that (a) it was unreasonable in all the circumstances for the applicant to join R2, and (b) R3 and R4 were represented by the same team of legal representatives and they have been running the same case together, I gave the following costs order nisi:
13.Only the applicant applies to vary the costs order nisi. By his summons, the applicant asks that the costs order nisi be replaced by the following order:
14.In other words, the applicant now seeks to have R3, as the unsuccessful respondent, pays all the applicant’s costs and the costs of the successful respondents (R1, R2 and R4) under a Sanderson order. Thus, the specific aspects sought to be varied concern R2’s costs and R4’s costs (and the applicant’s own costs in pursuing them) and whether a Bullock or Sanderson order should be given. 15.R1 and R2 indicated that they remain neutral to the applicant’s summons. R3 and R4 opposed and have together filed the 2nd affirmation of R3 and lodged their written submissions by Ms Eugenia Yang. Since 8 December 2022, R3 and R4 have been acting in person and have not given any written response as directed by this court to give in relation to the disposal of the applicant’s summons and the other costs matter. They also have not appeared at the hearing held on 27 April 2023. R2’s costs and the applicant’s costs in pursuing R2 16.The principles that govern the making of a Sanderson or Bullock order are well settled and not disputed. The court must, in each case, determine whether or not it was reasonable for the plaintiff to proceed against the successful defendant. Vaughan Williams LJ in Besterman v British Motor Cab Co Ltd [1914] 3 KB 181 explained that such costs form part of the reasonable costs of the action:
17.In paragraph 66 of the Judgment and following various findings that I have made earlier in the Judgment, I commented that the applicant ought not have made a claim against R2 at all. Based on that view and in the costs order nisi, I ordered the applicant to pay R2’s costs and did not order R3 to pay to the applicant such costs the latter was to pay to R2. 18.In R3 and R4’s written submissions, they relied on my said comment, and further relied on the fact that the applicant respectively reported and declared that R1 was his employer in his Notice of Accident dated 16 January 2015 and his declaration dated 2 March 2015. They also submitted that “As A is legally represented, all A needed to do is to enquire with R1 the circumstances of the case to ascertain which R to sue, and R2 would not be unnecessarily joined in these proceedings. As such, it is not reasonable for A to proceed against R2”[1]. 19.Mr Chung cited a number of authorities to remind this court that, given the way a casual worker in the building industry is often engaged in Hong Kong, the question as to whether in law he was an independent contractor or an employee, and if he was an employee, who was the employer, can be a complex one to resolve because it is a mixed question of law and fact; and that the present case is one of such instance in which that question proved to be rather complex. 20.I have no difficulty at all to accept that the present case was such an instance. 21.I also accept Mr Chung’s submission that the following matters, which turned out to be not seriously disputed, that implicated that R2 might be the employer (albeit among other matters that might exonerate R2, including the Notice of Accident and the declaration mentioned by R3 and R4):
22.At the hearing, this court also engaged Mr Chung in a discussion that, even though at the early stage of these proceedings matters were unclear, whether by December 2020, when all the witnesses have filed their last round of witness statements, matters might have become clarified to a point that the applicant ought to have discontinued his claim against R2. 23.Mr Chung referred to the following 2 authorities, which are not disputed by R3 and R4, and submitted that in viewing the factual matrix by which the court assesses the reasonableness of joining or continuing to pursue the successful respondent, one shall not adopt a hindsight approach, and should be astute to it, lest one would lose sight of the uncertainties surrounding the case at the time. 24.In the Court of Appeal case of Leung Lai Ha & Another v Hon Sau Ling [1993] 1 HKLR 86, when the CA held that the trial judge was wrong in ordering the plaintiff rather than the unsuccessful defendant to pay the costs of the successful defendant, Bokhary J (as he then was) had this to say:
25.In China Everbright Finance Ltd & Another v Chan Yung & Another [2006] 4 HKLRD L2, Deputy Judge Muttrie in deciding to vary the costs order nisi that the plaintiff paid the costs of the successful defendant reminded himself against the adoption of hindsight, thus:
26.Evidently, when making the comment in paragraph 66 of the Judgment, I have already found (a) in favour of the general credibility and reliability of the evidence of R2 and against that of the other witnesses (§39 of the Judgment), (b) R2 was merely helping R1 to contact the applicant to recruit him as the 3rd worker and R2 had had no dealing whatsoever with R3 and/or R4 (§§43, 44 and 64 of the Judgment), and (c) R2 gave the applicant HK$1,000 in the capacity of a middleman (§65 of the Judgment). 27.Mr Chung submitted, evidently rightly, that this court was able to come to those findings with the benefit of seeing and hearing all the witnesses and through evaluating a number of nuances; while in contrast, those matters that I found were uncertainties for the applicant at the time. 28.In the Judgment, I also found that the applicant was not conversant in Cantonese so that he would not have understood the contents of the 2nd R3R1 Conversation. Mr Chung submitted that therefore, and I accept, that the applicant would not know whether HK$2,100, as told to him by R1 and R2, was in truth the total sum to be received for the Demolition Work; such would depend on the credibility of R1 and R2. 29.Thus, I accept that I would be applying hindsight if I evaluate the reasonableness of the applicant in joining and continuing to pursue R2 with those above-mentioned findings in mind. Excluding those findings from consideration, I accept Mr Chung’s submission that at the time even after the parties have exchanged all the witness statements there were still reasonable uncertainties that R2 might be the employer or one of the employers of the applicant. 30.For completeness, I would simply record here my rejection of R3 and R4’s unsubstantiated and unmeritorious submission that it was unreasonable for the applicant to sue R2 because “all A needed to do is to enquire with R1 the circumstances of the case to ascertain which R to sue”. 31.In all, I find that it was reasonable for the applicant to join R2 and maintain the proceedings against him. It follows that the applicant’s costs in pursuing against R2 and R2’s costs should be paid by R3. R4’s costs and the applicant’s costs in pursuing R4 32.As explained, in the costs order nisi I made no order as to costs between the applicant and R4 based on my preliminary view that R3 and R4 all along acted together and therefore seemed to me at the time that there were no significant separate costs spent (a) by the applicant to pursue R4 which were separate and distinct from those spent to pursue R3 and (b) by R4 to defend which were separate and distinct from those spent by R3. 33.I directed the applicant to, and he did, attach to his written submissions a schedule listing out the items of work done to prosecute his claim against R4 which work was not subsumed under, or overlapped with, the work done to pursue his claim against R3. The schedule listed 8 items of such work estimated to cost totally HK$125,517. Of course, whether these items ultimately would be allowed and their assessed quantum are matters to be dealt with in taxation. For the present purpose, it is clear enough that (if it has been reasonable for the applicant to sue R4) there could very well be substantial costs that the applicant would not be able to recover if there is no order as to the costs between the applicant and R4. 34.R3 and R4 in their written submissions submitted[2], as I understand it, essentially:
35.I do not accept those submissions. 36.Firstly, I am of the clear view that it was amply justified and reasonable for the applicant to sue R4 as a party who might be liable. In gist, (a) it was common ground between R1 and R3 that R3 contacted R1 for the Demolition Work, (b) it was R3 himself who said R4 should be liable by saying (in his 2nd and 3rd witness statements but not his first witness statement) that he contacted R1 on behalf of R4, (c) while it was R1 and R2’s alternative plea that R3 or R4 was the employer. In such circumstances, I see no justification in principle, under the authorities or on the facts why the applicant was obligated to choose between which of R3 and R4 to sue, failing which he was unreasonable. 37.On their second submission, I simply do not see how, nor did R3 and R4 explain, double recovery would be occasioned by varying “no order as to costs” to the usual order - R3 paying the applicant his costs in pursuing R4 and paying R4’s costs whether by a Bullock or Sanderson order. Matters as to whether the same item in the applicant’s costs is claimed twice - once, in the context of pursing against R3, and second time when pursuing against R4 - if any, should and would be sorted out during taxation. 38.Thus, the costs order nisi that there be no order as to costs between the applicant and R4 should be varied to R3 paying the applicant’s costs in pursuing R4 and paying R4’s costs. Bullock or Sanderson 39.The remaining question is whether a Sanderson or Bullock order ought to be given. 40.It is well established and not disputed that it is a matter of discretion for the court as to whether to make a Bullock or Sanderson order, and the dominant consideration is how to distribute the hardship arising from the impecuniosity of the paying unsuccessful defendant (Bankamerica Finance Ltd v Nock [1988] 1 AC 1002, per Lord Brandon at p 1011E-1012A; China Everbright Finance Ltd & Anor v Chan Yung & Anor, HCA 18300/1999, unreported, 12 December 2006, Deputy High Court Judge Muttrie; Standard Chartered Bank Ltd v Li Wai Ping, HCA 10587/2000, unrep, 7 June 2011, Poon J (as he then was)). 41.R3 and R4’s submission is that there is no evidence to show that R3 was insolvent and a Bullock ought to be given. Though R3’s impecuniosity is not proven, neither is his ability and willingness to pay. It would not be right or prudent for this court to exercise its discretion based on the assumption that there is no risk of recovery from R3. 42.I am clearly of the view that a Sanderson order would achieve a much fairer distribution of hardship and is appropriate. Under a Bullock, the applicant takes on the primary liability to pay the costs of R1, R2 and even R4, who is solely owned and controlled by R3; and will have to look to R3 to reimburse him all those as well as to pay all of the applicant’s own costs; and the applicant will be made the only one among all the successful parties to bear completely and fully the risk of R3 not paying. While under a Sanderson order; the potential hardship would be shared by all the successful parties. Disposal 43.In the premises, I allow the applicant’s application and vary the costs order nisi and replace it with the costs order in terms of the applicant’s summons, save that R3 would instead be ordered to pay only 75% of R1’s costs (as I so held in the 2nd DECISION ON COSTS), and that there be certificate for counsel in respect of R1, R2 and R4’s costs. 44.I would also order, on a nisi basis to become absolute in 14 days unless there is an application to vary within that time, that R3 and R4 do pay the applicant his costs of this application, with certificate for counsel, and the applicant’s own costs be taxed in accordance with the Legal Aid Regulations. 45.Lastly, I thank Mr Chung and Ms Yang for their assistance.
Mr Gary KH Chung, instructed by Szwina Pang, Edward Li & Co, assigned by the Director of Legal Aid, for the applicant Attendance of the 1st respondent was excused Attendance of the 2nd respondent was excused The 3rd respondent was not represented and did not appear. Written submissions of Ms Eugenia Yang, instructed by his former solicitors, K K Lai & Co, Solicitors, for the 3rd respondent The 4th respondent was not represented and did not appear | ||||||||||||||||||||||||||||||||
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