Shah Nisar v. Wai Kit Engineering Co Ltd and Others

DCEC 1094/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 1094 OF 2004

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IN THE MATTER OF APPLICATION BETWEEN

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Coram:  Deputy District Judge J. Ko in Chambers

Date of Hearing:  18^th October 2005

Dates of further written submission:  18^th October and 1^st November 20005

Date of Handing Down Judgment:  14^th December 2005

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D E C I S I O N

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1.The applicant is claiming against the respondents in these proceedings for compensation under the Employees’ Compensation Ordinance (“Ordinance”).

2.This is the application by the applicant pursuant to Order 21, rule 3 of the Rules of the District Court to withdraw these proceedings and for the following costs orders:

a. “the 2^nd respondent’s costs of this case be no order as to costs”; and

b. “the costs of the case together with the costs of this application be paid by the 1^st and 3^rd respondents to the applicant to be taxed if not agreed”.

3.For the purpose of the present application, it is common ground that the applicant was employed by the 1^st respondent.  The 1^st respondent was the sub-contractor of the 2^nd respondent who, in turn, was the subcontractor of the 3^rd respondent.  On 17^th July 2003, the applicant suffered personal injury by accident arising out of and in the course of his employment.

4.On 13^th October 2003, the applicant (as plaintiff) commenced an action in the Court of First Instance under HCPI 1092/2003 against the respondents (as defendants) for common law damages.  On 22^nd September 2004, the applicant commenced the present proceedings.

5.Judgment was entered in HCPI 1092/2003 on 11^th April 2005 in favour of the applicant against both the 1^st and 3^rd respondents in the sum of $1,447,904.85 and the applicant’s claim against the 2^nd respondent therein was dismissed.  The aforesaid costs orders proposedby the applicant for these proceedings are apparently adopted from the final costs order of Sakhrani J in that action.

6.The respondents do not take issue with the applicability of Order 21, rule 3 and are agreeable to the withdrawal of these proceedings.  The remaining issue is on the question of the costs of these proceedings.

7.It is the respondents’ case that the applicant should pay all costs incurred on 2 grounds:

a. the present proceedings should not have been commenced bearing in mind the common law action had reached a mature stage in proceedings when these proceedings were commenced; and

b. the requirements in s.25 (2) of the Ordinance had not been complied with and therefore by virtue of s.25 (3)(i), no compensation would have been payable to the applicant.

Common law action having reached a mature stage?

8.The respondents’ counsel observes that the Application herein was filed more than 2 months after the Pre-Trial Review in HCPI 1092/2003 and a few weeks before the action was set down for trial.  He relies on the proviso in s.26 (1) of the Ordinance and submits that the applicant should not have commenced the present proceedings as these proceedings would not have come up for trial before the trial of the common law action.

9.As I understand him, the respondents’ counsel is saying that the damages awarded to the applicant in HCPI 1092/2003 would have included the amount of employees’ compensation payable under the Ordinance.  Hence, it was not necessary for the applicant to commence the present proceedings.

10.To start with, the law clearly permits the employee to lodge both the common law action and the employees’ compensation proceedings against the employer.  His Honour Judge Chan (as he then was) said in Lau Kwok-keung v. Evergo Electric Manufacturing Co Ltd [1989] HKDCLR 40 that:

“It is … clear that the law indeed permits two claims to be lodged by the employee against the employer.  It cannot be, in my view, an abuse of the process of the court to institute two sets of proceedings either one after another or at the same time.  The issues in the two claims are different and it is unlikely that the same issues are disputed or allowed to be disputed in the subsequent action.  Besides, the court has a discretion on the question of costs and would no doubt make the appropriate order of costs if the same issues are canvassed again.”

11.The accident happened on 17^th March 2003 and the 24 months period for the applicant to make a claim for compensation under s.14 (1) of the Ordinance would have expired on 16^th July 2005.

12.According to the Affirmation of Krishnan Sundaramoothy filed by the respondents, the Court of First Instance granted leave on 12^th July 2004 to set HCPI 1092/2003 down for trial in the running list with the case not to be warned before 10^th November 2004.

13.Although the trial of the common law action actually began on 17^th February 2005 and concluded on 24^th February 2005, judgment was apparently reserved.  There was no way parties would know whether judgment would be handed down before 16^th July 2005.

14.Moreover, I agree with the applicant’s counsel that given the defences relied on by the respondents in HCPI 1092/2003, there was no certainty the applicant would be successful in the common law action.  This is all the more so as there was also an issue of contributory negligence on the part of the applicant in HCPI 1092/2003 which might affect the quantum of damages awarded in the common law action.

15.All the above highlights the difference between the common law claim and the employees’ compensation claim, which was summarized by His Honour Judge Chan as follows:

“The basis and criteria of an employees’ compensation claim are different from those of a common law claim.  In many respects, an employees’ compensation claim resembles a strict liability or no fault claim provided the statutory provisions are satisfied.  Contributory negligence or fault on the part of the employee, with the very limited exceptions as provided in s.5 [of the Ordinance], do not enter into the picture.  The amounts of compensation to be awarded are by and large fixed by the Ordinance which specifies a minimum as well as a maximum.  A common law claim is based on well established principles of tort and is generally founded on the fault of the defendant but the plaintiff’s fault or contributory negligence is also taken into consideration.  The quantum of damages is decided by the principle that the plaintiff should as far as possible be put back into the position as if no tort had been committed.”

16.The respondents’ counsel then submits that even if the applicant received an unfavorable judgment in the common law action, the applicant could still have applied forleave to commence proceedings to claim employees’ compensation notwithstanding the 24-month period has expired.

17.Why should the applicant rely on the exercise of the discretion of the court if he could have made his application within time? There is no guarantee that the court would accede to the applicant’s request and grant leave under s.14 (4) of the Ordinance.  In fact, the applicant might have difficulty in justifying the excuse for his failure to make an application in time as reasonable!

18.In the premises, I am of the view that the applicant was entitled to commence these proceedings before the time bar (so to speak) to preserve his right to commence proceedings to claim compensation under the Ordinance.  Indeed, I agree with the applicant’s counsel that those instructing him might be courting a negligence suit if they had not commenced these proceedings within time.

19.The respondents’ counsel then submits that the applicant could have just filed the Application herein and then did nothing until the conclusion of the common law action in order to preserve his position and yet not incurring extra costs.

20.I find the above submission totally unjustified.  By a consent summons filed herein on 1^st December 2004, the respondents had apparently consented to filing of their Answer and List of Earnings in these proceedings.  Although the applicant subsequently took out an application for interim payment, the said application has been adjourned sine die with liberty to restore, again with the consent of the respondents (see the Consent Summons filed herein on 16^th March 2005).  The next substantive application is the present one for withdrawal of these proceedings.  In my view, the applicant has all along acted reasonably throughout these proceedings and no costs have been unnecessarily incurred.

Applicant has failed to comply with section 25 of the Ordinance?

21.As I understand him, the respondents’ counsel is complaining that the applicant has failed to notify the 1^st respondent(as the employer) in accordance with s.25 (2).  Given that the applicant has recovered damages against the 3^rd respondent (as the “third party” as defined in s. 25 (1)) in the sum of $1,447,904.85, which is more than the amount of compensation which would be payable in the present proceedings, no compensation shall be payable under s.25 (3)(i) of the Ordinance.  Hence, the applicant should, instead, pay costs to the respondents.

22.Essentially, respondents’ counsel’s argument is premised upon:

(a)  the applicability of section 25 of the Ordinance in the present situation; and

(b)  the applicant has failed to notify the 1^st respondent in accordance with s. 25(2).

23.It ha been noted that Sakhrani J held the 1^st respondent liable for the applicant’s injuries together with the 3^rd respondent in HCPI 1092/2003.  The learned judge found that the accident was caused by, inter alia, breach of duties on the part of the 1^st respondent as the applicant’s employer.

24.In Yardway Motors Limited v. Tam Siu Lun, CACV 135/2003, Le Pichon and Yuen JJA concluded that section 25 does not apply to a situation where both the employer and the “third party” were liable to the employee in common law (per Le Pichon JA at para.39-41 and per Yuen JA at para.47-60 of the Judgment).

25.I would respectfully adopt the conclusion of Le Pichon and Yuen JJA in Yardway Motors Limited.  Since the 1^st respondent is held to be liable to the applicant on common law together with the third party (i.e. the 3^rd respondent), section 25 of the Ordinance does not apply to the present situation and the respondents’ counsel’s argument, based on that section, thus fails.

26.In any event, the applicant’s solicitors have in fact sent a letter dated 15^th August 2003 to the 1^st respondent in the following terms:

“Date: 15^th August 2003

[1^st respondent]

Dear Sirs,

Re: Claimant:  [applicant]

…

Claimant’s Employer:	[1st respondent]
	[2nd respondent]

Claimant’s Main Contractor: [3^rd respondent]

We are instructed by [the applicant] to claim damages in connection with an accident at work…

…

A copy of this letter is attached for you to send to your insurer.  Finally, we expect a constructive reply to this letter within 21 days by yourselves or your insurer, failing which we shall forthwith commence proceedings.

Yours faithfully,

(Signed)

JOHN M PICKAVANT

[the applicant’s solicitors]”

27.No specific form is prescribed under s.25 (2) other than that the notice must be in writing.  The purpose of the notice must be to notify the employer of the employee’s intention to institute proceedings against a third party (see s.25 (3)(a)).  This is so because the employer has a right of action against the third party under s.25 (1)(b) and the employer may elects to join in the action begun by the employee against the third party to exercise such right if necessary.

28.The said letter was addressed to the 1^st respondent (i.e. the applicant’s employer).  It has clearly been stated in the first and the last paragraph of the said letter that the applicant (as the employee) was intending to institute proceedings.  Although the said letter did not specifically identified the intended defendant(s), all the respondents were named in the caption of the letter.  The format of the said letter was apparently adopted from the specimen letter before action at Annex A in Practice Direction 18.1.  In my view, the said letter is sufficient to constitute the written notice under section 25 (2).

29.Since the applicant (i.e. the employee) has not failed to notify the employer of his intention to institute proceedings in accordance with s.25 (2) of the Ordinance, s.25 (3)(i) is inapplicable.

Conclusion

30.For the above reasons, I make the following orders:

a. by consent, leave is granted to the applicant to withdraw these proceedings;

b. there be no order as to the 2^nd respondent’s costs of these proceedings; and

c. the costs of these proceedings including the costs of this application be paid by the 1^st and 3^rd respondents to the applicant, to be taxed if not agreed with certificate for counsel.

Mr. Nicholas Pirie instructed by Messrs John M. Pickavant & Co. for the Applicant.

Mr. Kamlesh Arjan Sadhwani instructed by Messrs Krishnan & Tsang for the Respondents.