LEE WAN YEUNG v. METRO WORLD AND ANOTHER

DCEC577/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 577 OF 2008

D E C I S I O N

1.  The parties have come before me on an argument as to the payment of interests on the compensation and costs. 

2.  The applicant applied for the usual interests at half judgment rate until date of judgment and costs be taxed on an indemnity basis.  The respondents opposed the application on the award of interests to the two dependents who are the children of the deceased.  The respondents raised the issue that the insurer, Kono, had tendered the sum for settlement in June 2007.  This tender was not accepted by the applicant’s solicitor at the time.

3.  The legal representative of the respondents, Mr Lee, relied on a Court of Appeal case of Maysun Engineering Co. Ltd. and Wormald Engineering Services Limited, CACV199/2006 (date of judgment 11 January 2007) where Tang VP held at paragraph 43 that:

 “The test is not whether the defendant had the use of the money.  The plaintiff who has rejected a tender cannot say that the defendant has wrongfully withheld payment.”

the test is whether, according to that case, the money was wrongfully withheld.

4.  It is Mr Lee’s further argument that though Madam Lo, the mother of the deceased, who was later on discovered to be mentally incapacitated, the settlement therefore required the court’s approval, therefore, interest payment on the compensation will not be challenged by the respondents.    The two other dependents , namely the two children of the deceased, could have taken their respective apportioned settlement sums when these sums were offered or tendered in 2007.  Mr Lee argued that there would be no need for their part of the settlement sums to wait for the approval of the court or indeed until the issue of the application for compensation under the Employees’ Compensation Ordinance, Cap.282.

5.  Mr Chan, counsel for the applicant, submitted that it was not possible for the applicant’s solicitor to advise its clients to accept two of the three sums apportioned offered by the respondents under the three cheques because section 13 of the Employee’s Compensation Ordinance would not allow it to happen, for under the legal aid certificate, the solicitor was assigned to act for Mr Lee and family members of the deceased.  Subsequently, as disclosed in the application taken out in May 2008, the applicant was Mr Lee Wan-yeung for himself and for and on behalf of other members of the family of Lee Kam-ming, deceased.  They were not separately represented. 

6.  Under the Ordinance, section 13(1) provides the following:

“Compensation payable where the death of an employee has resulted from an injury, other than those which have been determined under section 6B(1)(a), 6C(1)(a) or (11), 6D(6)(b) or 6E(1)(a) or (12), shall be paid to the court, and the court may -

 (a) in the case of compensation paid under section 6(1), order any sum so paid in to be apportioned among the members of the family according to section 6A; and

 (b) in the case of reimbursement paid under section 6(5), order any sum so paid in to be apportioned to the persons who have paid the expenses of the funeral of the employee and the expenses of medical attendance on the employee according to section 6E(5), and the sum so apportioned shall be paid to them or be invested, applied or otherwise dealt with for their benefit in such manner as the court thinks fit.”

7.  Section 13(2) provides the following:

“Except where otherwise provided by or under this Ordinance, any other compensation payable under this Ordinance shall be paid to the court, and any sum so paid shall -

(a) be paid by the court to the person entitled thereto; or

(b) if the compensation is payable under the provisions of section 7, 8, or 9 or is a lump sum payable under the provisions of section 10, be invested, applied or otherwise dealt with by the court for his benefit in such manner as the court thinks fit, provided that -

(i)  where periodical payments are payable under the provisions of section 8(2)(b)(i) or section 10, such payments may be paid by the employer direct to the employee; and

(ii)  where compensation has been agreed and approved in accordance with the provisions of section 8, such compensation may be paid by the employer direct to the employee.”

8.  Section 13(3) further provides the following:

“An employer may make a payment direct to an employee or member of the family on account of a claim which is pending settlement or determination, and the court or, if the compensation is not paid to the court, the Commissioner may order that the whole or any part of such payment shall be deducted from the amount of compensation payable to the employee or member of the family under the provisions of this Ordinance, provided that no such payment shall -

(a) constitute a periodical payment or an interim payment for the purposes of this Ordinance; or

(b) relieve the employer of an obligation to make any periodical payment or an interim payment under this Ordinance.”

9.  In the present case, as there was no compensation paid under section 6(1) and the Commission for Labour had not made any determinations under the Ordinance, section 13(1) had to be complied with which means the parties have to go to the court and compensation had to be paid to the court; the court may, under those circumstances, apportion the compensation amongst the dependents and give such directions for the application, investment, etc., in accordance with the individuals’ circumstances.

10.  Section 13(2) made it mandatory for the compensation to be paid to the court except for periodical payments under section 8(2)(b)(i) or section 10 where the employer may have paid the employee directly (usually prior to the hearing of the trial), or where the court approved such payments or compensation and periodical payments.

11.  The background of this case is that the respondents through the insurer, Kono, made an offer in late July 2007 to the legal representatives of the applicant, in this case Messrs Weir & Associates, to settle the employee compensation matter.  This offer was made some time before the issue of the application in May 2008.  The applicant’s solicitor, Messrs Weir & Associates, was only assigned to act for Mr Lee on 6 June 2007.  As soon as Messrs Weir & Associates was contacted by Kono, Messrs Weir & Associates had informed Kono that the mother of the deceased was not able to give instructions, they have difficulties in obtaining instructions from her.

12.  When the applicant’s solicitor, Messrs Weir, failed to respond to the offer to settle the matter in August 2007, Kono sent a cheque for the sum of $327,600 to Messrs Weir & Associates.  Messrs Weir & Associates informed Kono of the difficulties in obtaining instructions as one of the three dependents was suffering from unsound mind and returned the $327,600 cheque to Kono.  The respondent’s insurer, Kono, then decided to take matters into its own hands and apportioned the three dependents’ shares.  It further asked Messrs Weir & Associates to collect the three cheques apportioned for the three dependents in September 2007.  Messrs Weir & Associates quite rightly took time to consider its position and declined the offer.  They subsequently wrote to Kono informing it that one of the dependents, the mother of the deceased, is mentally incapable of giving instructions due to Parkinson’s disease.

13.  Then the parties went into a series of correspondences on the deceased’s mother’s mental state involving a request for medical certificate, and later on followed by further requests of a medical certificate from a doctor on the Law Society’s list who could give a valid certificate on mental disability.  There were also discussions and requests for a copy of her alleged written consent to the Commissioner of Labour to waive her right to claim the dependency to the deceased’s estate.

14.  It was not until 13 May 2008 that Messrs Weir & Associates took out the application on behalf of Mr Lee and the family members of the deceased against the two respondents.  After which, the Commissioner of Labour is no longer required to determine the compensation payable under the Ordinance.  In any event, the Commissioner has never made any determination in this case involving the deceased. 

15.  On 22 May 2008, Kono instructed Messrs W K To, its present solicitors, to act on behalf of the two respondents in the application, the application under section 13 of the Ordinance.   Section 13(1) made it very clear that any compensation payable under the Ordinance to an employee who died as a result of an injury during work has to be paid to the court.  The only exception is where the Commissioner of Labour had already made a determination under the Ordinance where the provisions for payment made directly to an employee such as periodical payments or medical expenses, these would be taken into consideration when the matter goes before the court.  In the present case, the Commissioner had never made any determination in respect of the deceased’s estate, or the deceased’s claim under the Ordinance.

16.  Further, section 13(1) of the Ordinance provides that it is the court which will out of the compensation paid to the court apportion the compensation amongst the dependents.  In the present case, Kono had made an offer to settle the compensation claim, it was not a periodical payment to the family members and dependents.  It was further not made to the dependents directly, it was made to the legal representative of the applicant.  And when the cheque was sent directly to the applicant’s solicitor, the applicant’s solicitor, Messrs Weir & Associates, quite rightly informed Kono the reason why it could not advise the dependents to accept the offer because one of the dependents was mentally incapable to give instructions to accept payment.  Kono went one step further, took the liberty to apportion the compensation and requested the applicant’s solicitor to ask their clients to accept and to pick up the cheques from Kono’s office.

17.  This was completely against section 13 of the Ordinance.  It cannot be regarded the same as a tender of settlement in the Court of Appeal case of Maysun because the present case is an employee compensation claim, not a commercial dispute or money dispute.  Special provisions have been made in the Employees’ Compensation Ordinance regulating such cases involving fatal injuries to employees.  These cases should not be foreign to Kono, the insurance company, which had handled thousands of such cases a year.  Kono should know better than to make such a mistake albeit with good intentions and eager to settle the claim early.  It is unfortunate that the dependents of the deceased, one of the dependents of the deceased suffered from incapacity and is unable to give instructions or manage her own affairs.  In such cases, in any event, the court has to be involved in approving the compensation.

18.  Furthermore, Kono made a more serious mistake in its eagerness to settle the matter early by usurping the court’s role and attempting to apportion the dependency payment out.  Section 13(1) is very clear, the compensation has to be paid to the court if the Commissioner had not made any determination in the matter and the matter has to go to court for the court to apportion the compensation for the dependents of the deceased.

19.  Under these circumstances, it is quite clear that the applicant’s solicitor had conducted the application, even before the application was taken out, quite properly and correctly.  The respondent’s insurer, Kono, was clearly wrong from the beginning by failing to comply with the requirements of the Ordinance.  As soon as Kono knew the Commissioner has not yet made a determination, there are various steps Kono could have made in this case.  It cannot be seen that those steps were taken, or taken promptly, before it proceeded to try to settle the matter with the solicitor representing the applicant.  I cannot see any reason why the applicant should not be awarded the interests from the date of the accident to the date of judgment at half judgment rate, and this I will allow. 

20.  On the other hand, on the application for indemnity costs, I do not think it is a suitable case where indemnity costs should be awarded.  Any wrongful conduct attributable to the respondents belonged to the respondents’ insurer, Kono, such wrongful conduct happened before the taking out of the application.  The action taken after the issue of the application cannot be described as oppressive.  However, I would be inclined to be generous in the taxation of pre-application costs to the applicant, due to the work that Kono had put Messrs Weir & Associates through before the issue of the application. 

(Discussion re costs)

21.  Interest will be payable from the date of accident to the date of payment into court, in this case 25 September 2008 at half judgment rate.  And costs of the application (including all reserved costs) be to the applicant with certificate for counsel.  Applicant’s own costs to be taxed in accordance with Legal Aid Regulations.