Ernst Eduard Sprecher v. Zingrich Cabletrans Gmbh and Another
Read the full judgment text of DCEC 1498/2006 on BabelCite. This District Court judgment.
1. The Applicant claimed that on 13 th January 2006 at Tower 7 of the Tung Chung Cable Car Project (“ Project ”) near Ngong Ping, Lantau his son Matthias Sprecher (“ Deceased ”), an erection supervisor employed by the 1 st Respondent (a Swiss company with its registered office in Switzerland), was struck on the head by an object hanging from a helicopter whilst dismantling the top section of a gin pole (“ Accident ”) and died as a result of head injuries. The Applicant claimed employees’ compens
Cited by 4 cases · Cites 8 cases
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DCEC1498/2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION EMPLOYEES’ COMPENSATION CASE NO. 1498 OF 2006 ------------------------ BETWEEN
------------------------ Coram : H H Judge Marlene Ng in Chambers (open to the public) Date of Hearing : 16th November 2007 Date of Decision : 28th November 2007 ----------------------------------- RULING ON COSTS ----------------------------------- I. Introduction 1.The Applicant claimed that on 13th January 2006 at Tower 7 of the Tung Chung Cable Car Project (“Project”) near Ngong Ping, Lantau his son Matthias Sprecher (“Deceased”), an erection supervisor employed by the 1st Respondent (a Swiss company with its registered office in Switzerland), was struck on the head by an object hanging from a helicopter whilst dismantling the top section of a gin pole (“Accident”) and died as a result of head injuries. The Applicant claimed employees’ compensation for himself and other member(s) of the family of the Deceased under the Employees’ Compensation Ordinance Cap.282 (“Ordinance”). 2.On 23rd November 2006, the 2nd Respondent, a locally incorporated company then acting in person, filed its Answer which denied the Applicant’s claim and averred that the Deceased worked under an illegal contract of service at the time of the Accident. 3.According to the Answer filed by the 1st Respondent (see paragraph 24 below), the 1st Respondent was at the material time the Deceased’s employer and sub-contractor to the 2nd Respondent. II. Employees’ compensation insurance 4.In fact, on/about 24th February 2005, the 2nd Respondent placed an employees’ compensation policy (“Policy”) with the Bank of China Group Insurance Company Limited (“Intervener”) to cover employees of its sub-contractors working in respect of the Project from 24th February to 24th November 2005 which was subsequently extended to 31st May 2006. The relevant provisions of the Policy are set out below :
III. Intervener’s summons 5.In/about August 2006, the Intervener received the Form 2 dated 16th January 2006 from the 2nd Respondent. It was the first report of the Accident to the Intervener. The Form 2 described the 1st and 2nd Respondents respectively as the Deceased’s employer and principal contractor and stated the Accident occurred in the course of work. 6.On 5th October and 13th November 2006, the Intervener issued letters to the 1st and 2nd Respondents requesting provision of information and documents as to the employment contract, wage records, work visa and Hong Kong identity card of the Deceased, and of documents showing Swiss occupation insurance cover of the Deceased whilst working in Hong Kong. According to the Intervener, no such documents were provided by the 1st and 2nd Respondents. 7.The Applicant issued the Application on 27th October 2006. The Intervener suspected the Deceased was an illegal worker. In fact, the Immigration Department by its letter dated 14th November 2006 and exhibited to the Giblin Affidavit (see paragraph 14 below) confirmed it had not received any visa application for employment from the Deceased and its records showed the Deceased arrived in Hong Kong as visitor on 3rd January 2006 with limit of stay up to 3rd April 2006. 8.On 20th November 2006, the Intervener’s solicitors wrote to the 1st and 2nd Respondents formally notifying them that the Intervener had decided not to exercise its subrogation right under the Policy and not to take over the conduct of the employees’ compensation proceedings on their behalf. 9.On 22nd November 2006, the Intervener applied by summons to join as a respondent in the present proceedings (“Summons”) and filed the affidavit of Lui Chun Ming (“Liu’s 1st Affidavit”) in support. The Intervener purported to serve the Summons and Liu’s 1st Affidavit on the 1st Respondent by airmail to its registered office in Switzerland. 10.Prior to the issuance of the Summons, the Applicant had not served any Notice to Insurer on the Intervener. The Notice to Insurer was filed on 1st December 2006. 11.At the initial hearing of the Summons on 6th December 2006, the Applicant opposed the application on inter alia the following grounds : (a) the 1st Respondent being an overseas company had not been properly served with the Summons, and (b) the Intervener had not given any undertaking to pay any judgment sum in the event the Applicant were successful in his claim against the 1st and/or 2nd Respondents. H H Judge H C Wong adjourned the Summons to be heard on a date to be fixed and awarded costs in favour of the Applicant against the Intervener in the sum of HK$600.00 to be paid forthwith. IV. Service out applications 12.On 15th December 2006, the Intervener applied ex parte for leave to serve the Summons and Lui’s 1st Affidavit out of jurisdiction on the 1st Respondent. On 19th December 2006, I granted an order in terms of such application (“Service Out Order”). 13.On 27th December 2006, the Applicant applied by summons inter alia for leave to amend the Application and to serve the Amended Application out of jurisdiction on the 1st Respondent at its registered office in Switzerland. The Applicant proposed to amend the Application by adding a prayer for (a) a determination under section 2(2) of the Ordinance in the event the court should find the Deceased’s contract of service were illegal (which was denied) that the court should deal with the claim as if the Deceased had been a person working under a valid contract of service, and (b) for compensation pursuant to the Ordinance. 14.The Applicant filed the affidavit of Niall Giblin (“Giblin Affidavit”) in support of the application. The Giblin Affidavit gave inter alia the following information :
15.On 5th January 2007, I granted inter alia leave for (a) the Applicant to so amend the Application, (b) the 2nd Respondent to file an Amended Answer, and (c) the Applicant to serve the Amended Application out of jurisdiction on the 1st Respondent. The Amended Application was filed on 12th March 2007. 16.The Intervener restored the Summons to be heard on 9th February 2007. But shortly before the hearing, at the joint request of the Applicant and Intervener, Deputy Judge S T Poon adjourned the hearing of the Summons to a date to be fixed (“Adjournment Order”). 17.In/about February 2007, the Intervener’s solicitors received a letter dated 24th January 2007 from Rüegsegger Treuhand (claiming to represent the 1st Respondent) with enclosures (in German). Upon translation into the English language, which took time, it transpired that the letter and enclosures touched on the Deceased’s employment status, earnings and insurance position. The Intervener’s solicitors claimed they made enquiries with the 2nd Respondent and Swiss lawyers, and discovered that the 1st and 2nd Respondents disputed over the compensation issue arising from the death of the Deceased. 18.The Intervener decided to proceed with the Summons and service of process on the 1st Respondent out of jurisdiction. On 23rd July 2007, at the request of the Intervener’s solicitors, the Chief Secretary transmitted the request for service of the Summons, Lui’s 1st Affidavit, Service Out Order and Adjournment Order on the 1st Respondent to the receiving authority in Switzerland. 19.Pursuant to their further enquiries, the Intervener’s solicitors received a reply letter from Rüegsegger Treuhand in early September 2007 with enclosures (in German). On 24th October 2007, the Intervener’s solicitors applied to restore the Summons to be heard on 16th November 2007. However, as at 13th November 2007, there was still no reply from the Swiss authority on progress of the service of process on the 1st Respondent out of jurisdiction. 20.In the meantime, on 23rd May 2007, at the request of the Applicant’s solicitors, the Registrar issued a Form 4 and Notice of Call-over Hearing returnable on 16th November 2007 to be served out of jurisdiction together with the Amended Application on the 1st Respondent. On 4th September 2007, at the request of the Applicant’s solicitors, the Chief Secretary transmitted the request for service of inter alia such documents on the 1st Respondent to the receiving authority in Switzerland. But as at 5th November 2007, there was still no reply on the progress of service of process on the 1st Respondent from the Swiss authority. 21.According to the Intervener’s solicitors, on/about 7th November 2007, the 1st Respondent’s present solicitors telephoned to advise they might have instructions to act for the 1st Respondent and to explain that the 1st Respondent’s representatives could not communicate in English so any English documents sent to the 1st Respondent had to be translated. 22.Not hearing anything further, the Intervener’s solicitors filed the 2nd affidavit of Lui Chun Ming on 14th November 2007 (“Lui’s 2nd Affidavit”) to provide updated information on the aforesaid developments with a view to inter alia adjourn the hearing of the Summons and the call-over hearing on the ground that service of process out of jurisdiction had not been completed. V. Disposal of the Summons 23.On 15th November 2007, the 2nd Respondent’s solicitors filed Notice to Act and the 1st Respondent’s solicitors filed the 1st Respondent’s Answer. The 1st Respondent’s solicitors filed their Notice to Act on 16th November 2007. 24.By its Answer, the 1st Respondent claimed that although the Deceased had been its employee for many years prior to the Accident, he was working in Hong Kong without a valid permit at the time of the Accident. When the Deceased entered into a written employment contract with the 1st Respondent in December 2004 to vary his employment terms so that he would be employed thereafter as installation supervisor in relation to the Project, it was expressly provided that his employment was to commence on obtaining a work permit from the Hong Kong Government. On 16th December 2004, the 2nd Respondent informed the 1st Respondent that its Mr Geni Manetsch was in Hong Kong trying to get work permits for those employed on the Project, so the 1st Respondent believed a work permit was being obtained by the 2nd Respondent for the Deceased. On 22nd January 2005, the 2nd Respondent as principal contractor and the 1st Respondent as sub-contractor entered into a contract for work and services concerning the Project. The Deceased came to Hong Kong and unknown to the 1st Respondent started working without a valid work permit. The Deceased’s employment in Hong Kong was illegal, and he would or should have known it was in breach of his immigration status amounting to a crime and he would be at risk of not receiving any employees’ compensation. 25.At the adjourned hearing of the Summons and the Amended Application on 16th November 2007, I made inter alia the following directions/orders : (a) leave to the Intervener to withdraw the Summons, (b) no order as to costs between the Intervener and the 1st and 2nd Respondents in respect of the Summons, (c) the 1st Respondent to file/serve list of earnings of the Deceased within 14 days, and (d) the Amended Application be adjourned to 11:30am on 1st February 2008. 26.Mr Giblin and Mr Chiu, respective solicitors for the Applicant and Intervener, made submissions on the outstanding issue of the Applicant’s costs of and occasioned by the Summons. I reserved my ruling on such costs issue to be handed down, which I now do. VI. Applicant’sstance on costs issue 27.Mr Giblin submitted that (a) the Intervener should pay costs of and occasioned by the Summons to the Applicant and (b) such costs issue was ripe for final determination without any need to await the resolution of the Applicant’s claim against the 1st and 2nd Respondents. He argued that the Summons had no merit and there was no basis for the Intervener to join as a respondent in the present proceedings. 28.Mr Giblin relied on the grounds set out in paragraph 11 above and added the following contentions :
Mr Giblin also cited the case of Woo Kin-wah v Somec (HK) Limited & anor [1993] 1 HKLR 300 in support. 29.To put Mr Giblin’s contentions in proper context, I note that the Applicant :
VII. Intervener’s stance on costs issue 30.Mr Chiu submitted that although the Intervener in the end sought leave to withdraw the Summons, it was entitled to issue the Summons for joinder as a respondent in the present proceedings in November 2006. But upon change of circumstances in November 2007 that removed the need for such joinder, ie the 1st and 2nd Respondents instructed solicitors to act on their behalf in the present proceedings to put forward their respective defence contentions to resist the Applicant’s claim for employees’ compensation, the Intervener immediately sought leave to withdraw the Summons. Mr Chiu argued that the Intervener acted reasonably all along and should not be liable to the Applicant for costs of and occasioned by the Summons. He relied on the case of Sami’an Sutinah v Leung Wai Kuen Katrina [2002] 2 HKC 706in support. 31.Alternatively, Mr Chiu suggested that the court could reserve this costs issue until the conclusion of the Applicant’s claim against the 1st and 2nd Respondents. However, Mr Chiu did not seek any recourse against the 1st and/or 2nd Respondents should the court award costs of and occasioned by the Summons against the Intervener in favour of the Applicant. VIII. Discussion 32.The starting point is that subject to section 53 of the District Court Ordinance Cap.336 and Order 62 rule 2(4) of the Rules of the District Court (“RDC”), the court has a complete discretion on costs. The cardinal rule is that costs should follow event except when it appears to the court that in the circumstances of the case some other order should be made (see Order 63 rule 3(2) of the RDC). 33.To understand the parties’ respective contentions and the authorities cited by Mr Giblin and Mr Chiu, it is necessary to revisit the law in relation to the relevant provisions in sections 24, 42, 43 and 44 of the Ordinance which are set out as follows :
34.As seen from the analysis below, the combined effect of the above statutory provisions is that the Intervener as insurer of an employees’ compensation policy under Part IV of the Ordinance is under a contingent and direct liability to the Applicant irrespective of the policy terms between the Intervener and its insured, ie the 1st and 2nd Respondents, and this forms the jurisdictional basis for joinder as respondent in the present proceedings. (a) Section 24 of the Ordinance 35.Section 24(1) of the Ordinance deals with the relationship between the principal contractor and the sub-contractor’s employee (see LeunLeung Chack v Asia Insurance Co Ltd [1991] 2 HKLR 496). Such provision gives the employee an additional remedy against the principal contractor beyond section 5 of the Ordinance. Thus, the combined effect of sections 5 and 24 of the Ordinance is that both the employer and principal contractor are severally liable to pay employees’ compensation to the employee for the same injury on duty. The employee is therefore entitled to join both the employer and principal contractor in the same proceedings and to claim employees’ compensation against both of them to the point of adjudication and award after which he is entitled to recover the full amount of compensation from one or other of them (see Hip Hing Construction Co Ltd v Wong Leung Tak & anor [1990] 2 HKC 119). (b) Synopsis of sections 42, 43 and 44 of the Ordinance 36.This brings us to sections 42, 43 and 44 of the Ordinance. In a nutshell, these provisions confer on the employee, who is not bound by the provisions of the employees’ compensation insurance policy, a statutory right to claim against the insurer in his own name as though he were a party to the policy. When the employer “becomes liable to pay any sum under the Ordinance” in respect an injury to an employee arising out of and in the course of employment, the employee will be able to claim in his own name for that sum (including interest and costs) directly from the insurer up to the amounts covered by the relevant policy. The only permitted exceptions are set out in section 43(2) of the Ordinance, which do not concern us here. (c) Section 43 of the Ordinance 37.H H Judge P Cheung (as he then was) in Wong Kam Fai v Yu Sai-wan & ors [1993] HKDCLR 67 held that section 43 of the Ordinance imposes an absolute liability on the insurer to pay the amount to the employee. The payment is imperative and immediate, and it is not open to the insurer to re-open issues (eg the issue of employment) that should be litigated in the employees’ compensation proceedings. To safeguard the insurer’s absolute liability, section 43(3) of the Ordinance enabled the insurer to become a party to the employees’ compensation proceedings and to raise such issues after it had been joined as a party. 38.However, the employer only “becomes liable to pay any sum under the Ordinance” in respect of an injury to an employee arising out of and in the course of employment under section 43(1) when it is quantified in one of the ways as provided in the Ordinance (see Wong Po Wah v Pacific Insurance Co Ltd [1988] 2 HKLR 417). 39.In the present case, the questions as to (a) whether the 1st and/or 2nd Respondents are liable to pay employees’ compensation to the Applicant, and (b) if so the quantum thereof, are still live issues between the Applicant and the 1st and 2nd Respondents. In the circumstances, the liability of the Intervener as employees’ compensation insurer of the 1st and 2nd Respondents under section 43(1) is only contingent. 40.Nevertheless, Sami’an Sutinah made clear that it does not matter that the liability under section 43(1) of the Ordinance is merely contingent. In that case, the employer was convicted of assaulting her employee who issued various actions for employees’ compensation and for damages. The insurer under the employees’ compensation insurance policy applied to be joined in the actions for damages in light of its potential liability under section 43(1) of the Ordinance. Whether the assault arose out of and in the course of employment remained a live issue. H H Judge Carlson held that where there is clearly a potential liability under section 43(1) of the Ordinance the insurer ought to be joined so that it has the right to be heard in respect of that potential liability. (d) Section 44 of the Ordinance 41.Following from the insurer’s absolute liability under section 43(1), section 44(1) of the Ordinance confers on the employee a right to proceed and recover direct from the insurer the amount of the employer’s liability to him (see Pang Wai Chung v Tai Ping Insurance Co Ltd [1999] 2 HKLRD 354). 42.There are a number of authorities, including Leung Chack, Woo Kin-wah, Siu Yin Kwan v Eastern Insurance Co Ltd [1993] 2 HKLR 101 and B+B Construction Co Ltd v Sun Alliance and London Insurance plc [2001] HKC 127, which held that the employee of the subcontractor was not entitled to seek payment from the insurer of the principal contractor under section 44(1) of the Ordinance. However, that was because Part IV of the Ordinance imposes no obligation on a principal contractor to insure against the statutory liability imposed by section 24(1) and, more importantly, “the person insured” under the employees’ compensation insurance policies in those cases was expressly confined to employees of the principal contractor. Such concerns have no bearing here because the Policy placed by the 2nd Respondent extended to employees of its subcontractors (including those of the 1st Respondent). (e) Woo Kin-wah 43.The combined effect of sections 24, 42, 43 and 44 of the Ordinance as discussed above demonstrates that Woo Kin-wah(which turned on a factual matrix far different from that of the present case) does not assist the Applicant’s contentions. 44.In that case, the 1st and 2nd defendants were respectively the principal contractor and employer of the plaintiff. The 2nd defendant’s insurer was actively defending the claim for them. Tugu Insurance Co Ltd (“Tugu”), the 1st defendant’s insurer, having regard to the deeming provisions of section 24(1) of the Ordinance, applied to be joined in the action pursuant to section 43(3). Tugu failed in its application. 45.The main ground was that the deeming provisions of section 24(1) of the Ordinance only had effect when there was a claim for employees’ compensation and not where the action was for common law damages, so Tugu would not have been liable to indemnify the 2nd defendant. Plainly, Woo Kin-wah is distinguishable from the present case which is a claim for employees’ compensation. 46.Further, there was no suggestion in Woo Kin-wah that Tugu might be liable to the plaintiff as insurer of the 1st defendant, and no averment that the 1st defendant was brought within the parameters of “the Insured” in the policy issued by Tugu. 47.Kempster JA said at p.305 as follows :
48.Here, there is no dispute that the Policy is “a policy of insurance for the purposes of this Part” and that it covers both the 1st and 2nd Respondents as the insured therein. Based on the aforesaid analysis of the law, the Intervener is plainly under a “contingent and direct” liability to the Applicant pursuant to sections 43 and 44 of the Ordinance, and the quid pro quo of such liability is surely the Intervener’s entitlement in such circumstances to seek leave under section 43(3) of the Ordinance to join as a respondent to the present proceedings. (e) Procedural basis for Intervener’s joinder application 49.But according to Lui’s 1st Affidavit, the Intervener did not seek leave to join as a respondent to the present proceedings pursuant to section 43(3) of the Ordinance. Rather, it applied for joinder under Order 15 rule 6 of RDC and rule 24 of the Employees’ Compensation (Rules of Court) Rules (“ECR”). 50.Order 15 rule 6 of RDC provides inter alia as follows :
51.Rule 24(1) of ECR provides as follows :
(f) Order 15 rule 6 of RDC 52.The object of Order 15 rule 6(2)(b) of RDC has been summarised by Ma J (as he then was) in Wing Mou Construction Co Ltd (in liquidation) v Cosmic Insurance Corporation Ltd and Mansion Holdings Ltd (Third Party) HCCT40/2001 (unreported, 20th June 2002) as being to ensure that (a) all issues in dispute be effectively adjudicated upon by the court and (b) all relevant parties are before the court. The court can “on such terms as it thinks just” give leave for a person to be joined as a defendant and allow him to participate in the proceedings to the extent permitted by the court. 53.Ma J (as he then was) went on to say that under Order 15 rule 6(2)(b) the relevant parties include those who have a legitimate legal or financial interest in the outcome of the issues in dispute. But this is merely a basic threshold that has to be satisfied for requiring the court to exercise its discretion under Order 15 rule 6(2)(b). The court has a residual discretion to decide whether joinder of a party should be allowed :
54.By reason of the matters set out in paragraph 48 above, the Intervener clearly has a legitimate legal and financial interest in the outcome of the Applicant’s claim for employees’ compensation against the 1st and 2nd Respondents. I draw assistance from Sam’ian Sutinah in which H H Judge Carlson allowed the insurer to be joined pursuant to Order 15 rule 6(2)(b)(i) of RDC so that the insurer had the right to be heard in respect of its potential liability under section 43(1) of the Ordinance. 55.H H Judge Carlson went on to say at pp.709-710 that he ought not impose terms for allowing such joinder by obliging the insurer to give an undertaking to pay any damages that might be awarded against the defendant in the way that was ordered in the case of Gurtner v Circuit [1968] 2 QB 587 “because, of course, under section 43(1) [the insurer’s] liability will only arise if it is shown that in fact the assault which is complained of in this case arose out of and in the course of the plaintiff’s employment with the defendant. That is a matter which remains a live issue in these two common law actions as it does in the application for employees’ compensation and so I don’t think it would be right to call for an undertaking to be given ……” 56.This is echoed by the Court of Appeal in Chu Yuen-wah v Lee Kwok-kee & anor [1995] 2 HKLR 280. In that case the wife as passenger claimed damages for injuries suffered due to alleged negligent driving by her husband. The husband was covered by a policy issued by the insurer. The insurer gave notice to the husband that it would avoid the policy on the ground that it was obtained by misrepresentations and non-disclosures, and commenced proceedings under section 10(3) of the Motor Vehicles Insurance (Third Party Risks) Ordinance Cap.272 for a declaration that the policy was avoided. The insurer also applied to be joined as 2nd defendant pursuant to Order 15 rule 6(2)(b)(i) in the proceedings commenced by the wife against the husband. It was held that the court’s jurisdiction under Order 15 is wide enough to permit the joinder of a party whose liability to pay is contingent upon the outcome of the proceedings which it seeks to join but also upon some other event or proceedings (eg the outcome of the section 10(3) proceedings). 57.It was further held that the jurisdiction of the court did not depend on seeking an undertaking from the insurer to abandon the section 10(3) proceedings and to be bound in the action as a condition of being let in. Mortimer JA at p.287 said that the undertaking in Gurtner was required in very unusual circumstances, ie the Motor Insurance Bureau was allowed to join in the proceedings when it had no legal liability to pay the plaintiff, so the undertaking was required for obvious and good reason. 58.But here the Intervener had a “contingent and direct” liability to the Applicant under sections 43 and 44 of the Ordinance. In the circumstances, whilst I accept the court may impose conditions for joinder of an insurer as a respondent in employees’ compensation proceedings, it is not under any constraint to do so. I therefore disagree that Mr Giblin’s contention set out in paragraph 11(b) above ousts the jurisdiction of the court to grant leave for the Intervener to join as a respondent in the present proceedings. (g) Rule 24 of ECR 59.Rule 24(1) of ECR is of even wider ambit than Order 15 rule 6 of RDC. In Patricia Aunette Sheppard and infant suing by her grandmother and next friend Beryl K Sheppard v Richstone Industries Co Ltd & anor DCEC113, 116& 117/1984, H H Judge Li (unreported, 27th May 1985) said as follows :
60.In the judgment of H H Judge Roy of 30th April 1985 in the same case (but limited to DCEC113/1984), it was said as follows :
61.I have no doubt there is jurisdiction under rule 24 of ECR to grant leave to the Intervener to join as a respondent in the present proceedings. (h) Discretion 62.In the circumstances, the Intervener has established the threshold requirement for the court to exercise discretion to allow joinder as a respondent in the present proceedings. However, I am of the view that, like Order 15 rule 6 of RDC (see paragraph 53 above) and section 43(3) of the Ordinance (see Woo Kin-wah at p.305 per Kempster JA), the jurisdiction under rule 24 of ECR is permissive, and the court must be assumed to have been given discretion to grant or refuse leave to an insurer to join as respondent. 63.In considering the issue of costs of and occasioned by the Summons, I should consider whether there is any reasonable and appropriate basis for the Intervener to issue the Summons in the first place and to maintain the Summons until its withdrawal on 16th November 2007. Having considered the totality of the circumstances, I have no hesitation in concluding that the Intervener has acted in a reasonable manner in issuing the Summons. 64.Mr Giblin pointed out that the Intervener refused to exercise its subrogation right but did not disclaim liability, so the court would not have exercised its discretion to let the Intervener in given such ambiguous stance. I agree that normally where the insurer and the insured have the same interest it is unusual for the court to invoke section 43(3) of the Ordinance, Order 15 rule 6 of RDC and/or rule 24(1) of ECR to allow double legal representation in the same interest. This is because the insurer can exercise its subrogation right or, failing the exercise of such right, the insured can properly defend its (and thereby the insurer’s) interest. The situation will be different if the interests of the insured and insurer are different, for example, where the insurer attempts to avoid the insurance policy ab initio, say, on grounds of misrepresentation and non-disclosure (see Chu Yuen-wah) or where the insurer disclaims liability under the policy. 65.However, the court’s unfettered discretion to allow joinder is not limited to such situations. When the Applicant commenced the present proceedings, the Intervener well knew it had a contingent and direct liability under sections 43 and 44 of the Ordinance. With the filing of the Answer by the 2nd Respondent, it also became aware that the legality of the Deceased’s contract of service was in issue although no particulars were given. At that stage, neither the 1st nor 2nd Respondent actively responded to the initial inquiries of the Intervener and/or its solicitors. In respect of the 1st Respondent, there were additional problems of distance (ie the 1st Respondent was located in Switzerland) and language (ie the 1st Respondent dealt in the German language). Further, in respect of the present proceedings, the 2nd Respondent was not legally represented and the 1st Respondent did not enter any appearance at all. 66.Given that the Intervener has an interest in ensuring all matters in dispute should be effectively and completely determined and adjudicated upon, and further given the real possibility of conflict of interest between the 1st Respondent (as direct employer of the Deceased in respect of a potentially illegal contract of service) and 2nd Respondent (as principal contractor) as a result of the issue over the legality of the Deceased’s contract of service, the Intervener’s subrogation right might not have been sufficient to protect its interests in the particular circumstances of this case. The concern over potential conflict of interest is not unreal. As it turned out from the Answers filed by the 1st and 2nd Respondents respectively, the 2nd Respondent denied liability on the basis that the contract of service was illegal, and the 1st Respondent, whilst accepting that the Deceased was working in Hong Kong without a valid permit at the time of the Accident, claimed it was the 2nd Respondent that should have arranged for a work permit for the Deceased. It is therefore difficult for the Intervener in the special circumstances of this case to protect itself in the usual manner of taking over the defence for the 1st and 2nd Respondents. Further, since the contract between the 1st and 2nd Respondents was in the German language, it is unclear whether any provision by the Intervener of legal representation to both of them under its subrogation right will affect their respective contractual rights. 67.There is therefore a good arguable case that at the time when the Summons was issued the court would have exercised its discretion in favour of the Intervener for the reason that if the action proceeded without its intervention, the full merits of the defence contentions of the 1st and 2nd Respondents (which might have been in conflict) would not have been properly aired, and the Applicant’s case properly defended in the present proceedings. Natural justice requires that the Intervener should be able to protect its legitimate interest. 68.Another criticism laid against the Intervener by Mr Giblin was that the Intervener failed to resort to separate proceedings or arbitration to resolve its differences with its insured. But irrespective of any determination by such separate proceedings or arbitration in relation to the policy coverage, the Intervener in the present case, unlike Tugu in Woo Kin-wah, has a contingent and direct liability under section 43(1) of the Ordinance. Once that is understood, the various factors discussed in paragraphs 63-67 above suggest there is a respectably arguable basis for the Intervener’s as a respondent as prayed for in the Summons. 69.The Intervener also cannot be criticised for seeking to withdraw the Summons on 16th November 2007. In the year following the issuance of the Summons, the Intervener was involved in the service of process out of jurisdiction on the 1st Respondent and there were no substantive developments. It should be noted that the service out of jurisdiction was not completed even by 16th November 2007. But a few days before the hearing on that day it was confirmed there would be legal representation for both the 1st and 2nd Respondents so that the Intervener can be assured their respective defence contentions will be fully aired in the present proceedings and the Applicant’s claim be effectively and properly defended. 70.I should also mention that Mr Giblin submitted that the Intervener was procedurally incorrect in attempting to serve the Summons by airmail and in failing to apply for service on the 1st Respondent out of jurisdiction when it issued the Summons. Whilst it is true that the Intervener initially adopted an incorrect procedure, I agree with Mr Chiu that the Intervener has paid the price for such procedural error by having the Summons adjourned and by being made liable to pay the costs of the hearing on 6th December 2006 to the Applicant. Further, such procedural error has since been rectified by the Service Out Order and the Intervener’s arrangements for service pursuant to the Hague Convention. I do not regard such matter as being relevant to the exercise of discretion in relation to the costs of and occasioned by the Summons. (i) Summary 71.For all of the foregoing reasons and bearing in mind that the Applicant opposed the Summons, I consider that the most appropriate and fair order for costs to make is no order as to costs of and occasioned by the Summons. IX. Costs 72.I now come to the question of costs of the argument on 16th November 2007 on the above costs issue. Since I have reserved my ruling on the above costs issue, I will deal with costs of the argument on a nisi basis. The Intervener has successfully resisted the Applicant’s claim for costs of and occasioned by the Summons. There is no reason why costs of the argument on 16th November 2007 should not follow event. I therefore grant a costs order nisi that the Applicant do pay costs of the argument on the costs issue to the Intervener assessed on a gross sum basis at $1,000.00.
Representation: Mr N N Giblin of Messrs Munros for the Applicant. Mr I Childs of Messrs Stephenson Harwood & Lo for the 1st Respondent. Mr K C Lau of Messrs C C Lee & Lee for the 2nd Respondent. Mr A Chiu of Messsrs Deacons for the Intervener. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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