CHAN WING FAI v. WONG HON KWONG AND OTHERS

HCPI675/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 675 OF 2001

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J U D G M E N T

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1. This matter which raises a short and interesting point has been very helpfully argued on both sides. This is a personal injury action in which the plaintiff was injured in the course of his employment with the 3rd defendants whilst working for them at the airport.

2. As frequently happens, he has brought two sets of proceedings. Firstly, an application for Employees' Compensation under the Employees' Compensation Ordinance against his employer, the respondent in that application.

3. That matter was agreed and he received the sum of $389,505.25. He subsequently brought this common law action against these three defendants as tortfeasors who he says are jointly and severally liable. This action has now been settled at the door of the court. Judgment has been entered in the sum of $740,790.25 against all three defendants. As required by section 26(1) of the Employees' Compensation Ordinance, the plaintiff has had to give credit for the award of Employees' Compensation. The net amount of this judgment therefore is $351,285, together with an order for costs of the action in the plaintiff's favour and provision for interest on this net amount.

4. There are also contribution proceedings between the three defendants. They are agreed that they should be liable as to one-third each on liability. The point at issue is this: it is submitted on behalf of the 1st and 2nd defendants that their contribution only extends to the net amount of $351,285. Mr Dennis Law, for the 3rd defendants, that it should be on the agreed gross value of the claim of $740,790.25.

5. The argument on behalf of the 1st and 2nd defendants is as follows. The plaintiff was always bound to give credit for what he received in the Employees' Compensation proceedings. The gross worth of his claim in this action is merely a starting point to which one must refer in order to get to the net amount after deducting the amount of the Employees' Compensation award. The 3rd defendant/employer is left to claim an indemnity under section 25 of the Employees' Compensation Ordinance, which he may or may not be able to achieve, depending on whether he can prove his claim for such an indemnity. If he fails then, in the usual way, that would not cause him any particular injustice because the employer would normally be covered by insurance in the Employees' Compensation proceedings.

6. For the 1st and 2nd defendants, Mr Chan's main point as a matter of principle is that where the plaintiff is bound to give credit for the Employees' Compensation award, a non-employer defendant in a common law action can only ever be liable for the net worth of a claim and that must represent the extent of his contribution liability in the contribution proceedings. Mr Law submits that this is to wholly misunderstand the concept and effect of the means by which an injured workman is able to obtain compensation from his employer tortfeasor and from other joint tortfeasors. He usually first elects to take the short and simple route by getting Employees' Compensation and then comes the more demanding and lengthier process of suing at common law for damages. The worth of the claim as common law damages is the gross amount. This is the "value" of the damages for the tort committed by all three defendants jointly and severally. The plaintiff has already received Employees' Compensation paid by one of the tortfeasors (his employer) for which he has to give credit. By virtue of the contribution proceedings the defendants must share in the whole "worth" of the damage caused to the plaintiff. The non-employer defendants cannot be heard to say that because the employer defendant has paid in separate Employees' Compensation proceedings he can only recover under the rather strict conditions as to indemnity enacted by section 25 of the Employees' Compensation Ordinance.

7. I entirely agree with Mr Law's analysis. Had there been no Employees' Compensation application by the plaintiff, Mr Chan would have had no argument to address. His clients would have had to contribute to the gross amount. I do not believe that just because a plaintiff has received advance payment by means of an award of Employees' Compensation the non-employer defendants can fortuitously reduce their liability and can restrict themselves to contribution to the net amount only. This is, in my judgment, to misunderstand the nature of the claim for damages in the action and the purpose of contribution proceedings in such an action. The object of these contribution proceedings is to apportion the full value of the plaintiff's claim as between the defendants.

8. But for this Employees' Compensation payment, it would have been the gross amount. There must now be a proper accounting between the three defendants which should be as follows:

9. The 1st and 2nd defendant should pay the net amount of the judgment to the plaintiff, being $351,285, and $142,575 to the 3rd defendant. Their respective liabilities are as to one-third of $740,790.25, which is $246,930 each, the 3rd defendant has therefore overpaid by $142,575 as between himself and the 1st and 2nd defendants.