LEE YUI KAI v. TD CO., LTD AND OTHERS

CAMP 142/2018

[2019] HKCA 256

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 142 OF 2018

(ON AN INTENDED APPEAL FROM DCEC NO 111 OF 2015)

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J U D G M E N T

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Hon Kwan JA (giving the judgment of the court):

1.  We are concerned with a summons issued by a party who is the applicant in proceedings for employees’ compensation. The summons was issued on 26 September 2018 and the provisions relied on as specified in the marginal note are section 23(4) of the Employees’ Compensation Ordinance, Cap 282[1] (“ECO”) and Order 59 rule 2A of the Rules of the High Court. The summons seeks an order as follows:

“There be extension of time granted by the Court of Appeal to the Applicant to appeal the Judgment by HH Judge K W Wong dated 31 May 2018 for the reasons set out in the written statement of the Applicant for extension of time to appeal, annexed hereto.”

2.  After the 2^nd respondent (“R2”) served skeleton submissions in opposition to the applicant’s summons, the applicant by his counsel Mr Patrick Lim wrote to the court on 30 November 2018 submitting that no leave to appeal is required to appeal the judgment of 31 May 2018 (“the May Judgment”), which related only to costs, by virtue of section 23(1) of ECO, but for the fact that the applicant was out of time to bring the intended appeal.  If, however, the Court of Appeal should take the view that leave is required to appeal against the “costs only” judgment, he would ask this court to treat the summons as “an application for leave to appeal as well as extension of time” and in that situation give directions to the parties to file further submissions.

3.  Having considered the documents placed before us, we decided to exercise our power under Order 59 rule 2A(5)(a) to deal with this summons without an oral hearing.  We have taken a view whether leave to appeal is required for a “costs only” order in employees’ compensation proceedings but do not find it necessary to direct the parties to file further submissions, as we shall explain.

Background

4.  We will endeavour to state succinctly the relevant background matters.

5.  The applicant sustained injuries at work in the premises of the 1^st respondent (“R1”).  He was a plasterer. R1 intended to operate a hotel for pets on the premises and for that purpose approached a contractor, which was R2, to renovate the premises.  R2 introduced three workers, one of them being the applicant, to carry out the work.

6.  The applicant brought a claim for employees’ compensation against R1 and R2, claiming that he was employed by both R1 and R2.  R2 denied he was the employer but did not suggest that the applicant was employed by R1, whether in its answer or its witness statements.  R1 denied it was the employer and suggested that R2 should be the employer as all matters concerning time, payment and mode of work were arranged and tools were provided by R2.

7.  The trial was fixed for four days in August 2017.  At the end of the second day, R2’s counsel informed the court that R2 was prepared to accept liability.  On that basis, Mr Lim (who appeared for the applicant throughout) indicated that the applicant would withdraw his claim against R1.

8.  On 10 August 2017, HH Judge K W Wong entered judgment for the applicant against R2 on liability and granted leave to the applicant to withdraw his claim against R1.  He directed the parties to lodge submissions on the outstanding issues (the amount of compensation and costs) on or before 18 August 2017 and adjourned the matter to 15 September 2017.

9.  The applicant and the 2^nd respondent wrote to the court on 18 August 2017 informing the judge that they had reached agreement on further matters: the amount of compensation that R2 should pay the applicant; that R2 was to pay the applicant’s costs in pursuing R2, to be taxed if not agreed; and R2 was to pay the costs of the 3^rd respondent (the Employees Compensation Assistance Fund Board), to be taxed if not agreed.  When the hearing resumed before the judge on 15 September 2017, R1, R2 and the applicant managed to agree the amount of R1’s costs as well, in the sum of $6,000.  There were only two outstanding matters to be resolved by the court and they were: (1) the costs of R1 – whether the applicant or R2 should be liable to pay R1 the costs agreed at $6,000; and (2) the costs of the applicant in pursuing R1 – whether those costs should be paid by R2 as part of the applicant’s reasonable costs of the proceedings (i.e. whether a Sanderson or Bullock order should be made).

10.  Judgment on those matters was handed down on 31 May 2018.  This is the May Judgment referred to earlier, for which the applicant seeks leave in this summons to appeal out of time.  The judge applied the established principles referred to in Fung Chun Man v Hospital Authority [2012] 1 HKC 531 and Chong Ngan Seng v China Harbour Engineering Company Limited & Ors, CACV 54/2012, 25 September 2013.  He declined to exercise his discretion to make a Sanderson or Bullock order.  He was critical of the legal advisers of the applicant.  The pleaded case that both R1 and R2 were the employers was totally lacking in facts to justify this “unusual situation”.  The applicant’s written statements were “too brief” on this controversial issue and had “obvious facts” been investigated earlier, it would not have been difficult for the applicant to come to a view that R1 might not be his employer.  The judge was not satisfied that the applicant was really in genuine doubt as to who was his employer, and even if he might have misconception or difficulty in deciding who was his employer, they were not caused by R2.  The judge ordered the applicant to pay R1’s agreed costs of $6,000 and held that R2 is not liable for the applicant’s costs in pursuing R1.

11.  The applicant did not lodge an appeal against the May Judgment within time.  Instead, on 8 June 2018, he issued a summons under the “inherent jurisdiction of District Court” for an order that the costs order made in the May Judgment be “reopened, reheard, reconsidered and varied” in that R2 should be ordered to pay R1’s costs of $6,000 and the applicant’s costs in pursuing R1.  The applicant’s stance was that the judge had got the costs order wrong when applying the established principles, and the applicant was entitled to ask the judge to re‑open the case before the order was sealed or otherwise perfected on good reasons being shown, to avoid a costly appeal.

12.  The “rehearing summons” was heard by the judge on 27 July 2018 and the judge handed down his decision on 15 August 2018 (“the August Judgment”).  The judge dismissed the rehearing summons, taking the view that the “reconsideration jurisdiction” should be exercised upon exceptional circumstances being shown, otherwise it would subvert the appeal process (Noga v Abacha [2001] 3 All ER 513 at §§43 to 47).  The applicant’s arguments had been ventilated once, the judge had ruled against him, so the matter should be left to the Court of Appeal.

13.  On 11 September 2018, the applicant filed a notice of appeal against the August Judgment.  This is CACV 449/2018.  He sought to contend in the grounds of appeal that the judge was in error in holding that exceptional circumstances had to be shown for the judge to revisit his decision up to the time the order was perfected.  The other grounds concerned the contention that the judge was in error in not making a Sanderson or Bullock order.

14.  The present summons was issued two weeks later on 26 September 2018, seeking an extension of time to appeal against the May Judgment. There was no supporting affirmation to explain why the intended appeal was not brought within time, although the statement settled by counsel annexed to the summons did set out the thinking why the course mentioned above was taken.  The grounds of appeal in the draft notice of appeal against the May Judgment are essentially the same as the grounds advanced in CACV 449/2018 relating to the contention that the judge was in error in not making a Sanderson or Bullock order.

Whether leave to appeal is required to appeal against a costs only order in employees’ compensation proceedings

15.  We will deal with this question first.  The relevant statutory provisions are as follows.

16.  Sections 23(1) to (3) of ECO read:

“(1) Subject to the provisions of this section and of section 13[2], an appeal shall lie to the Court of Appeal from any order of the Court[3].

(2) Except with the leave of the Court or of the Court of Appeal (which shall not be granted unless in the opinion of the Court of Appeal some substantial question of law is involved in the appeal) no appeal shall lie if the amount in dispute is less than $1,000.

(3) No appeal shall lie in any case in which the parties have agreed to abide by the decision of the Court, or in which the order of the Court gives effect to an agreement come to by the parties.”

17.  Section 14(3) of the High Court Ordinance, Cap 4 (“HCO”) reads:

“(3) No appeal shall lie –

…

(e) without the leave of the court or tribunal in question or of the Court of Appeal, from an order of the Court of First Instance or any other court or tribunal made with the consent of the parties or relating only to costs which are by law left to the discretion of the court or tribunal;”.

18.  Mr Lim submitted there are two conflicting decisions of the Court of Appeal whether leave is required to appeal against a costs only order in employees’ compensation proceedings.  The earlier decision is 譚耀輝 v Aberdeen Marina Holdings Ltd, CACV 167/2005, 3 November 2005, written by Le Pichon JA, with whose judgment Tang JA and Suffiad J agreed.  The later decision is that of Cheung JA in Ngai Chu v Lau Pong Chun trading as Yau Pong Construction, CACV 402/2004, 16 November 2005, with whose judgment Ma CJHC and Burrell J agreed.  Aberdeen Marina Holdings was not mentioned in Ngai Chu.

19.  Mr Lim relied on Ngai Chu, in particular §§29 and 30, in which Cheung JA stated that section 23(2) “does not mention leave to appeal except in matters of less than $1,000”, that the meaning of section 23(1) is “clearly that leave is not required”, and that “the appellant is entitled to have an unqualified right of appeal”.

20.  The two decisions are not conflicting, properly understood.

21.  Aberdeen Marina Holdings was an appeal from a costs order alone in employees’ compensation proceedings.  The Court of Appeal ruled that leave to appeal was required as sections 23(1) and (2) of ECO cannot be construed so as to override section 14(3)(e) of HCO.  In §8, Le Pichon JA said it is possible to reconcile section 23(1) with section 14(3)(e) by construing the words “any order of the Court” in the former provision as referring to orders made under the substantive provisions of ECO whether awarding compensation or determining questions of law arising out of that ordinance but not costs orders which fall under “the law, rules and practice” of the District Court in or in connection with civil actions in the District Court which by virtue of section 21(1) of ECO apply to compensation claims.  And the words in parenthesis in section 23(2) tend to indicate that “any order of the Court” in section 23(1) would not include costs orders since a costs order would not usually involve “some substantial question of law” but the exercise of the judge’s discretion.

22.  Ngai Chu was an appeal against the District Court’s decision dismissing a claim for employees’ compensation.  It was not an appeal against a costs order alone.  Section 14(3)(e) of HCO was not engaged.  The point argued by the respondent was that leave to appeal was required by section 63(3) of the District Court Ordinance, Cap 336.  That submission was rejected.  Cheung JA held that section 23 of ECO is the governing provision and the decision under appeal was clearly “an order of the Court” within section 23(1).  What he said about an “unqualified right of appeal” must be read and understood in the context of the matter under discussion.

23.  The holding in Aberdeen Marina Holdings that leave to appeal is required for a costs only appeal in employees’ compensation proceedings is clearly right.

24.  We hold that leave to appeal is required for the intended appeal against the May Judgment, which only relates to costs.  We decline the invitation of Mr Lim to direct the parties to make further submissions whether leave should be granted in this situation.  We think there may well be overlapping arguments if further submissions are ordered and submissions have already been made dealing with leave to bring the intended appeal out of time.  If this is not an appropriate case to extend time to appeal, it is not necessary to consider if leave should be granted to appeal against the costs only order.  This would be a waste of time and costs.

Principles on granting leave to appeal out of time

25.  The principles are well established (Wong Yuk Tung v Wong Po Ling & Anr [2018] HKCA 109 at §17).  In deciding whether to exercise discretion to grant extension of time to appeal, these factors are usually taken into account:

(1)   the length of the delay;

(2)   the reasons for the delay;

(3)   the chances of success of the proposed appeal; and

(4)   if there is prejudice to the potential respondent.

26.  We will consider these factors in turn.

Length of delay

27.  The deadline for bringing the intended appeal expired on 30 June 2018.  Even after the August Judgment was given, the applicant delayed for another six weeks until 26 September 2018 when the summons for extension of time was issued.  The total delay is about three months.  This is a substantial delay (Wong Yuk Tung v Wong Po Ling & Anr at §18.5).

Reasons for delay

28.  The better practice is to file an affidavit deposing to any facts relied on by the applicant and giving a full account of, and explanation for, the whole of the delay since time expired (Hong Kong Civil Procedure 2019, vol 1, §59/4/9).  Instead, the applicant chose to set out the reasons for the delay in a statement drafted by counsel annexed to the summons.

29.  According to the statement, the applicant took out the rehearing summons on 8 June 2018 “with a view to save costs of an appeal”, and “as [the applicant] had taken out the application to Court below to re‑consider with a view to saving costs, no appeal was lodged to appeal [the May Judgment].”  It was asserted that the rehearing summons was taken out “timeously”, and “had [the applicant] succeeded it would not have been necessary to appeal the costs order in [the May Judgment].”  And the applicant “became out of time by reason of the fact that the refusal to re‑consider [i.e. the August Judgment] came about after the 30 days to appeal [the May Judgment] had expired.”

30.  We do not accept these are valid reasons for the delay.

31.  It was the applicant’s own choice to seek a re-consideration of the May Judgment by re-arguing the matter before the judge instead of lodging an appeal.  He did not get the desired result at the re-hearing.  Leaving aside whether the step taken could reasonably be expected to have resulted in saving costs (which transpired not to be so), he could at least have filed a notice of appeal (which would be based on just the same grounds any way as the arguments made at the re-hearing) before time to appeal was to expire.

32.  We find the substantial delay inexcusable.

Chances of success of the proposed appeal

33.  There being substantial and inexcusable delay, the applicant has to show a real prospect of success on the merits in the intended appeal for the Court of Appeal to exercise discretion in his favour to extend time (Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125 at 128C and 129I).

34.  Mr Lim submitted that the present application for extension of time to appeal against the May Judgment was made to protect the applicant’s position in the event that the Court of Appeal upholds the judge’s decision in the August Judgment not to exercise the reconsideration jurisdiction.

35.  Be that as it may, one must focus on the May Judgment and see whether there is any valid basis for the Court of Appeal to interfere with the judge’s discretion not to make a Sanderson or Bullock order.  The Court of Appeal will not interfere with the exercise of discretion on costs unless it is shown that the judge failed to exercise the discretion, or exercised it on a false principle, or did not exercise it judicially, or the exercise of discretion was demonstrably flawed.

36.  The judge gave cogent reasons why he did not think it reasonable for the applicant to pursue R1 and rejected the contention there was real risk that R2 might be absolved from liability.  He set out the matters which would point to the suggestion of R1 not being the employer[4] and noted there is no evidence that the applicant or his legal advisers had addressed their mind to those matters[5]. He was therefore not satisfied that the applicant was in genuine doubt as to who was his employer[6].

37.  The proviso under section 2(1)(b) of ECO excludes as an employee “any person whose employment is of a casual nature, and who is employed otherwise than for the purpose of the employer’s trade or business”.  The applicant (whom the judge found to be “very forthcoming and straightforward” in his evidence[7]) knew that R1 was intending to operate a pet hotel business at the renovated premises and he was obviously not employed for the purpose of R1’s pet hotel business.  The question of whether the proviso in section 2(1)(b) was engaged must arise and had such obvious facts been investigated earlier, it would not have been difficult for the applicant to come to a view that R1 might not be his employer[8]. Mr Lim in fact acknowledged in §12 of his opening submission at the trial that “since the Applicant’s “employment” to work at the premises was of a casual nature i.e. day to day and the renovation of the premises was NOT the 1^st Respondent’s trade or business, the proviso excludes the Applicant from being the 1^st Respondent’s employee”.

38.  Section 3 of ECO defines an employer to include “where the services of an employee are temporarily lent or let on hire to another person by the person with whom the employee has entered into a contract of service …, the latter shall, for the purposes of this Ordinance, be deemed to continue to be the employer of the employee whilst he is working for that other person”.  As the judge had pointed out, the present situation was apparently caught by section 3 so R2 remained the applicant’s employer[9].

39.  Mr Lim sought to rely on a letter dated 7 March 2017 (written just five months before the trial and more than two years after the employees’ compensation proceedings were brought) from R2’s solicitors to the applicant’s solicitors alleging that R2 was merely introducing the applicant to R1 for their direct instructions and/or employment.  This letter was only disclosed for the first time in the rehearing summons.  In any event, the judge had considered it and decided not to give weight to it[10].  We do not think he could be rightly criticised, bearing in mind a host of other factors considered by the judge which amply supported his conclusion that the applicant should not have pursued R1 or should have discontinued the proceedings commenced against R1 in January 2015 after some investigation.

40.  We do not think the applicant has shown any real prospect of success on the merits of the intended appeal.  As this requirement is not met, it is unnecessary to consider the question of prejudice to R2.

Disposition

41.  We decline to exercise our discretion to grant leave to appeal against the May Judgment out of time and dismiss the applicant’s summons for extension of time.

42.  In light of our judgment, the applicant should give serious consideration what to do with his appeal in CACV 449/2018.

43.  As the present application is entirely without merit, we make a further order under Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be considered at an oral hearing inter partes.

44.  There is no reason why costs of this application should not follow the event.  We make an order nisi the applicant should pay R2’s costs of this summons.  We have considered the defendants’ statement of costs for summary assessment seeking costs in the amount of $71,960.  We assess the amount of reasonable costs at $43,460.  We further order the applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

45.  The costs order nisi and gross sum assessment will be made absolute if no application for variation is made by any party within 14 days of the handing down of this judgment.