Tai Shing Fai v. Wong Chun Tung t/a Express Fortune Engineering Co and Another

DCEC 649/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 649 OF 2006

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BETWEEN

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Coram : Deputy District Judge J. Ko in Chambers (open to public) 

Date of Hearing : 8^th January 2008

Date of Handing down Decision : 17^th January 2008

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DECISION

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1.This is the Applicant’s application to debar the 2^nd Respondent from adducing the evidence of Wong Chun-tung at trial.  The said Mr. Wong trading as Express Fortune Engineering Co. (“Express Fortune Company”) is named as the 1^st Respondent. 

Background

2.I shall begin by highlighting the relevant background of this case to set the context of this application. 

3.On 15^th May 2006, the Applicant commenced this case to apply for compensation against the 1^st and 2^nd Respondents under the Employees’ Compensation Ordinance.  The Applicant’s pleaded case is that:

(a)	Personal injury was caused to him by accident on 19th March 2005 when his left index finger was injured by a cutter.
(b)	He was employed by the 1st Respondent as a worker at the time of the accident, and the accident arose out of and in the course of such employment.
(c)	The 1st Respondent was a sub-contractor of the 2nd Respondent who was the principal contractor of the work.
(d)	Sick leave was granted from 19th March 2005 to 8th July 2005.
(e)	Subject to discovery, the Applicant earned a monthly salary of about $9,100 for the month immediately preceding the accident, and he earned the same amount on average during the 12 months or such lesser period of employment with the 1st Respondent prior to the accident.

4.The 2^nd Respondent filed an answer to the Applicant’s application, but the 1^st Respondent had failed to do so. 

5.The first hearing was held on 21^st July 2006 and was attended by the Applicant’s solicitor, the 1^st Respondent personally and the 2^nd Respondent’s solicitor.  Her Honour Judge Ng adjourned the hearing to 8^th September 2006 in view of the 1^st Respondent’s then pending application for legal aid.  The Director of Legal Aid subsequently refused to grant legal aid to the 1^st Respondent. 

6.On 8^th September 2006, the learned Judge directed the 1^st Respondent to file and serve an answer within 21 days, gave directions for discovery and witness statement, and adjourned the application sine die with liberty to restore.  It should be noted that the 1^st Respondent was also present at this hearing.

7.The 1^st Respondent had failed to comply with the learned Judge’s direction to file an answer and the Applicant applied to restore the hearing.  At the restored hearing on 22^nd December 2006, the learned Judge entered judgment on liability against the 1^st Respondent and gave further directions to prepare the case for trial.  The 1^st Respondent was absent at this hearing.

8.In the meantime, the Applicant and the 2^nd Respondent continued with their preparation for trial.  The 2^nd Respondent obtained leave to amend its answer and filed the witness statement of its witnesses including that of Mr. Wong.

9.It was at this juncture that the Applicant took out this application to debar the 2^nd Respondent from adducing the evidence of Mr. Wong. 

10.The case has now been set down for trial commencing on 28^th February 2008 with an estimation of 5 days.

Discussion

11.This application is directed at the evidence of Mr. Wong as disclosed in his witness statement.  Other than stating some background information (in paragraphs 1-4) and explaining why he has allowed the judgment to be entered against him (in paragraph 12), Mr. Wong states that:

(a)	He, the Applicant and one Mr. Chan Chiu-Yin were in fact partners trading in Express Fortune Company, although he was registered as the sole proprietor of the business.  Hence, the Applicant was not an employee of the 1st Respondent. (see paragraph 7)
(b)	The three of them misrepresented to the 2nd Respondent that they were representing Express Fortune Hong Kong Limited (“Express Fortune Limited”) and obtained the work from the 2nd Respondent.  Express Fortune Limited was the usual sub-contractor of the 2nd Respondent for such work.  Hence, the 1st Respondent was not a sub-contractor of the 2nd Respondent. (see paragraphs 5-9)
(c)	The Applicant did not receive any salary from the 1st Respondent.  Express Fortune Company received approximately $300,000 for the work done and each partner (including the Applicant) shared about $30,000 from the net profit.  The Applicant had further received the sums of $10,000 and $41,339.99 on account of his injury. (see paragraphs 10-11 and 13-15)

12.The application is said to be based on issue estoppel or collateral attack.  The Applicant relies on the following passage from the judgment in Lam Chi Fat v. Liberty International Insurance, CACV 421/2002, 3/4/2003 in support of his application:

“

24.

By making default in giving notice of intention to defend the defendant admits all the allegations in the statement of claim indorsed on the writ (Cribb v. Freyberger [1919] W.N. 22): see note 13/0/10 of Hong Kong Civil Procedure 2002…”

13.In my view, the admissibility of Mr. Wong’s evidence at trial depends on whether his evidence will be relevant to any issue(s) in dispute.

14.Insofar as the case between the Applicant and the 1^st Respondent is concerned, judgment on liability has been entered.

15.Although there is no requirement for a respondent in employees’ compensation proceedings to give notice of intention to defend, I consider that the rationale behind the passage quoted from Lam Chi Fat is applicable to our case. 

16.In Ho Chi-ching v. Saiky Company Limited, DCEC149/2002, 16/2/04, at para.8-11, His Honour Judge Lok has set out what the court will do when the respondent in an employees’ compensation proceeding has failed to lodge an answer and appear at the hearing.  In the present case, it has not been suggested that Her Honour Judge Ng granted the judgment against the 1^st Respondent on the strength of anything other than what is pleaded in the application.  No evidence was received and no reasons for the judgment were given.  The only basis upon which the judgment could have been given was that the allegations on liability pleaded in the application has been admitted by the 1^st Respondent. 

17.Be that as it may, the judgment entered against the 1^st Respondent is on liability only.  Mr. Wong is still entitled to contest quantum at trial.  In this regard, he cannot be barred from testifying at trial in his own defence on matters such as the sick leave granted and the monthly earnings of the Applicant (if any). 

18.Furthermore, the judgment dated 22^nd December 2006 is only against the 1^st Respondent.  Insofar as the 2^nd Respondent is concerned, both liability and quantum are still live issues. 

19.Counsel for the 2^nd Respondent has summarized the pleaded defence of the 2^nd Respondent as follows:

“	The 2nd Respondent’s case … in a nutshell is that [Express Fortune Limited] was an authorized sub-contractor of the 2nd Respondent.  The Applicant, the 1st Respondent and one Chan Chiu-Yin were its employees.  They formed a partnership [Express Fortune Company] in the name of the 1st Respondent.  They then misrepresented to the 2nd Respondent that they were acting for and on behalf of [Express Fortune Limited], thereby taking up work from the 2nd Respondent without reporting to [Express Fortune Limited].  The defence of the 2nd Respondent thus boils down to 2 points:
	(1)	The 1st Respondent was not a sub-contractor of the 2nd Respondent, the sub-contractor being [Express Fortune Limited].
	(2)	The Applicant was not an employee of the 1st Respondent, they together with Chan Chiu-Yin being in partnership.”

20.The Applicant has denied in his reply that he was a partner of Express Fortune Company and that the 1^st Respondent was not a sub-contractor of the 2^nd Respondent.

21.So the issues on the true relationship between the Applicant and Express Fortune Company and the true relationship between the Respondents are opened in the pleadings and will be dealt with at trial.  In this regard, the evidence of Mr. Wong as stated in his witness statement are relevant to the liability of the 2^nd Respondent and cannot be excluded.  Mr. Wong’s evidence on quantum is also relevant as between the Applicant and the 2^nd Respondent.  It will be for the trial judge to decide how much weight (if any) should be attached to Mr. Wong’s evidence in the light of the judgment against him and his explanation for his default.  

22.For the above reasons, I consider that the application to debar the 2^nd Respondent from adducing the evidence of Mr. Wong at trial should be refused.  The application under paragraph 1 of the summons dated 20^th September 2007 is therefore dismissed.

23.The trial of this case will proceed as scheduled.

24.I have already heard submissions on costs.  There is nothing to justify a departure from the usual rule that costs should normally follow the event.  Certificate for the 2^nd Respondent’s counsel is warranted because legal argument is involved.  I therefore order the Applicant to pay the 2^nd Respondent’s costs of this application (including any reserved costs) in any event to be taxed if not agreed and with certificate for counsel.  The Applicant’s own costs is to be taxed in accordance with Legal Aid Regulations.

Representation:

Miss Teresa Au, of Messrs. Fong Chan & Lee (assigned by D.L.A.), for the Applicant

Mr. Anthony Cheung, instructed by Messrs. Benny Kong & Yeung, for the 2^nd Respondent