GURUNG SABITA v. PIZZA EXPRESS (HONG KONG) LTD

DCEC 505/2018

[2019] HKDC 521

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 505 OF 2018

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DECISION

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1.  This is an application made by the applicant by way of summons filed on 14 March 2019 under Order 21 rule 3 of the Rules of the District Court (“RDC”) seeking to wholly discontinue the current action with no order as to costs.

2.  The respondent consented to the discontinuance but objected to the proposed costs order. 

BACKGROUND

Undisputed fact

3.  This case started off as a rather straightforward employees’ compensation application.  The applicant was employed by the respondent.  She claims she had sustained injury during an accident at work on 1 May 2016.  

4.  The following facts are not in dispute and can be gleaned from the pleadings:-

(i) the applicant was employed by the respondent as a pizza chef (as alleged by the applicant) and a pizzaiolo (as alleged by the respondent);

(ii) the applicant was in the course of her employment with the respondent on 1 May 2016;

(iii) the applicant took a total of 235 days of sick leave from 2 May 2016 to 11 January 2017;

(iv) from May 2016 to January 2017 the respondent paid a total of HK$110,950.44 as advance payments to the applicant;

(v) by a letter dated 22 November 2016 issued by the loss adjusters appointed by the respondent (“the Loss Adjusters”), the respondent invited the applicant to attend a medical appointment with Dr Lie Wai Hung, Chester, an orthopaedic specialist, on 29 November 2016 (“Dr Lie’s Appointment”) with the undertaking that they would provide the applicant with free medical treatment and pay for the medical expenses for such treatment.  They further undertook not to recover any part of the cost of the medical expenses from the applicant;

(vi) the applicant admitted that she had received the above letter from the Loss Adjusters;

(vii) the applicant did not attend Dr Lie’s Appointment at the scheduled time and place;

(viii) by a letter dated 6 December 2016 issued by the Loss Adjusters on behalf of the respondent, the applicant was invited to attend a medical examination by Dr David Cheng on 12 January 2017 pursuant to section 16 of the Employees’ Compensation Ordinance, Cap 282 (“the Ordinance”) (“the Section 16 Examination”);

(ix) the applicant did not attend the Section 16 Examination, whether on 12 January 2017 or at all;

(x) the applicant has not provided the respondent with the opinion of any registered medical practitioner or registered Chinese practitioner that she was unable or not in a fit state to attend the Section 16 Examination, whether on 12 January 2017 or at any time at all; and

(xi) the applicant has not indicated that she was willing to attend another Section 16 Examination, whether within 15 days from 12 January 2017 or at all.

5.  Based on the above undisputed facts, the respondent contends that the applicant’s right to receive compensation has been extinguished under sections 10A(4), 16(4) and 16(8) of the Ordinance. 

The applicant’s repeated failure in filing the reply

6.  In a draft proposed amended reply (“Draft Amended Reply”) prepared by the applicant (which has never been filed), the following explanation has been purportedly given as the reason of the applicant not able to attend Dr Lie’s Appointment:-

“The Applicant avers that there was (sic) certain terms written on it inviting her to attend an appointment with a Dr. Lie Wai Hung Chester at 4 p.m. on 29 November 2016 (“the 1^st letter”).  Given her elementary proficiency of English, she did not understand the purpose of the appointment letter nor did she understand the contents or consequence of the said written undertaking.  She was confused and then cancelled the appointment by herself when she received a call from a female office staff of the Respondent.”

7.  However, the reason the applicant says she did not attend the Section 16 Examination was due to the fact that her previous lawyers had misled her into believing that it was up to her whether she wished to attend the medical examination or not; that the respondent could stop making further periodical payments; and it was up to her whether she wished to attend the medical examination. She also blamed her previous lawyers for not advising her on the legal consequences of failing to attend Section 16 Examination: (see §12 of the Draft Amended Reply). 

8.  Pursuant to the Order of His Honour Judge Harold Leong dated 19 September 2018, the applicant was given leave to file a reply within 28 days from that date.  However, the applicant failed to file the reply within time.  The applicant’s solicitors then took out a summons dated 19 November 2018 before me seeking leave to file the reply out of time.  At that hearing, the applicant’s solicitor failed to give a satisfactory explanation as to why the reply was not filed in time as ordered.  As a consequence thereof, while I gave leave for the applicant to file and serve the reply within 7 days from the date of that hearing, I ordered that the costs thrown away as a result of the delay in filing of the reply to be borne by the applicant solicitor’s firm personally, ie not to come out from either the taxed or common fund of the legal aided applicant or the Legal Aid Fund.  The costs of that application was summarily assessed at $3,000 by me at the hearing which was ordered to be paid forthwith by the assigned solicitor.

9.  The reply was eventually filed on 3 December 2018, just before the 5:00 pm deadline on that day.  In the meantime, the respondent filed their witness statements relating to the applicant’s failure to attend the Section 16 Examination as ordered by His Honour Judge Leong.  However, I note that the applicant has failed to file and exchange her witness statement on this issue.

10.  Instead, a consent summons was filed on 7 January 2019 where the parties agreed to allow the applicant to file and serve the Draft Amended Reply within 14 days from the date of the consent summons.  

11.  However, the Draft Amended Reply was never filed by the applicant. 

12.  Then, out of the blue, the applicant’s solicitors took out the present summons to apply to wholly discontinue the present action with no order as to costs.

The court’s observations

13.  I should note at this juncture that the applicant has been on legal aid before the commencement of the application on 5 March 2018.  I also note that during the course of the present proceedings, there has been no less than 4 legal aid notices of re-assignment of solicitors filed.  This was after the case was transferred from the previous assigned lawyer who worked for another firm on 6 March 2018.  Although the assigned solicitors are different on each occasion, the case remained with the applicant’s present firm of solicitors since the filing of the application in March 2018. 

14.  I also note that the present application to discontinue the entire action was not supported by any affidavit evidence, whether it is from the applicant herself or from any of the 4 assigned solicitors.  The only explanation/ground given by the applicant is one contained in the written submission of the applicant’s solicitor who represented the applicant in the at the hearing before me.  The applicant submits that “irrespective of the merits, it made commercial sense for the action to be discontinued at an early stage.” However, I note that Mr Niki Mok, who represents the applicant in the current application, is not one of the 4 assigned solicitors assigned by the legal aid, although he works for the applicant’s firm.

DISCUSSION

15.  Mr Mok does not take issue on the legal principles raised by Mr Leon Ho of counsel who represents the respondent at the hearing.

16.  In Wu Rufang v Xiao Yongru t/a Chien Kee Plastic Materials DCEC 558/2013, unreported, 19 August 2016, HHJ Levy summarized the legal principles on the costs of discontinuance at §13:-

“(1) A court has a complete unfettered discretion on costs, and the exercise of discretion is to be based on doing justice between the parties.

(2) When a proceeding is discontinued, the starting position is for the costs to be paid by the discontinuing party (Townmens Investment Co Ltd v Wider River Ltd (In Liquidation) unless it can be displaced by the demonstration of exceptional circumstances: Mariner International Hotels Ltd v Atlas Ltd (No 2).

(3) In situations where parties (as in the present case) have chosen not to go to trial to resolve their outstanding questions of costs, a claimant (the applicant) shall be required to demonstrate, “that his case is so strong that he is bound to win had it gone on to trial and therefore he was justified in commencing the action in the first place …...”: Anmol Kumar Sawlani v Yeshma Gobindram Sawlani.”

17.  In the present case, the applicant seeks to discontinue the whole proceedings even though she has not received any compensation from the respondent yet. Save from the untested and bare assertions stated in the Reply and the Draft Amended Reply (which is not supported by any evidence), the applicant has not given any convincing reason as to why she chooses to discontinue with the present action at this stage.  In other words, the applicant has successfully applied for legal aid, chose to commence the present application, decided not to co-operate with the respondent’s appointed Loss Adjusters to undergo Dr Lie’s Appointment and the Section 16 Examination, run the case for over a year, then without any good reason at all, decided to take out the present application to discontinue the whole action with a request that she does not have to pay for any of the costs at all.  

The court’s findings

18.  I agree with Mr Ho that the starting position for such application must be that the costs have to be paid by the party seeking the discontinuance of the action, unless of course the applicant is able to demonstrate that there are exceptional circumstances which would justify a departure from the normal rule. 

19.  In my view, there is no question that the respondent has incurred substantial costs since the applicant commenced the present proceedings in March 2018. 

20.  Further, it is clear to me that the applicant does not have any reasonable cause in failing to attend the Section 16 Examination. In Cheung Sau Lin v Tsui Wah Efford Management Ltd [2018] 3 HKLRD 875, in a similar situation where the applicant had failed to attend a section 16 examination the court found in favour of the employer respondent.  In Liu Weiguang v Li Keng Ko [2019] 1 HKLRD 553, HH Judge Levy held that where an employee failed to attend the medical examination arranged under section 16 of the Ordinance, and if the failure extends over 15 days without reasonable cause, the employee would not be entitled to further compensation under the Ordinance.  The learned judge made it clear in the decision that even if the employee was ill-advised by his or her legal advisors in not attending the examination, the fact itself would not be amounting to “reasonable cause”. 

21.  Hence, even assuming that the applicant’s unsubstantiated allegation as contained in her Reply/Draft Amended Reply is true for the moment, namely, that her previous assigned solicitor had advised her that the respondent “could stop making any further periodical payment” and “it was up to her whether she wished to attend the medical examination”, this in my view is not a valid reason for failing to attend the Section 16 Examination.  Even if her former assigned solicitor did not expressly inform her the legal consequence of not attending the Section 16 Examination, ignorance of law in my view is not an excuse.  In any event, there is no reason why the applicant could not have sought clarification with her former assigned solicitor as to what it could mean. Further, her recent Draft Amended Reply in suggesting that it was her lack of proficiency in English which led to her misunderstanding would not constitute to a good excuse either. First, she could always consult her lawyers as to the contents of the request made by the Loss Adjusters as she was represented by lawyer assigned by the Director of Legal Aid then.  Second, she could have asked her current assigned solicitor to enquire from the respondent as to whether they would be prepared to revive the offer of the Section 16 Examination.

22.  Looking at the matter in the round, I do not see any good reason why the applicant could not have attended the Section 16 Examination.  She has failed to demonstrate there are any exceptional circumstances as to why this court should depart from the default rule that she should bear the costs of the proceedings.  I therefore make an order that the applicant should bear the costs of the respondent in the proceedings (including the costs of the present application).

Who should bear the costs? 

23.  However, this leaves us with one outstanding question and that is who should pay for such costs.

24.  First, I do not see any good reason why the applicant’s present solicitors should take almost a year to take out the present application since the issues of Dr. Lei’s Appointment and Section 16 Examination had first been raised in the answer filed by the respondent on 13 April 2018. 

25.  From April 2018 onwards, the 4 assigned solicitors (which all worked for the same firm of solicitors) would have had ample of opportunities to enquire into the matter and take instructions from the applicant.  They also would have had plenty of opportunities to take instructions from the Director of Legal Aid as to how to proceed with the case. 

26.  What I fail to understand is why it had taken 3 further re-assignment of solicitors (albeit all working for the same firm of solicitors) for the applicant to wake up to the fact that she should apply to the court to discontinue the action.  Of course, in the meantime, the respondent continued to incur substantial amount of costs in defending the matter.  Even though I have ordered the costs of the respondent to be borne by the applicant, in the normal course of event, such costs will have to be borne by the Legal Aid Fund as the applicant is on legal aid.  This does not only include the costs of the respondent but also the costs of the applicant during the past year.  In my view, this calls for an explanation from the assigned solicitors as to why such costs should not be borne by them personally instead of the Legal Aid Fund.  It seems to me obvious that if the applicant has no merits in pursuing the case due to her failure in attending the Section 16 Examination, she should have applied to discontinue within a reasonable time, for example, within 2 to 3 months after the respondent has filed its answer where it had raised this issue.  Instead, 3 to 4 assigned solicitors (who all worked for the same firm of solicitors) were happy to let this case continue while at the same time allowing the costs on both sides continued to accumulate.  This to me could not be right and public funds should not be used to cover the inefficiency or incompetency of lawyers, if indeed it was the case here.  However, I do not exclude the possibility that the assigned solicitors might have a legitimate explanation for the delay in making the application. Therefore, I would make a direction that the assigned solicitors should be given 21 days to show cause as to why they should not be made personally liable for the costs incurred from say two months after the answer was filed by the respondent in this case.  I so make such direction in this case before deciding who should ultimately be responsible for paying the respondent’s costs and the applicant’s own costs.

27.  I would also direct a copy of this decision to be sent to the Director of Legal Aid for his consideration, and if he deems appropriate, to make representations at the next hearing when the issue of who should ultimately be responsible for the costs of the proceedings will be decided. 

CONCLUSION

28.  In conclusion, I would allow the application to the extent that the whole action can be discontinued with costs in favour of the respondent, such costs to be taxed if not agreed with certificate for counsel.  I would order that the assigned solicitors in this case should show cause within 21 days from the date of handing down this decision to explain why they should not bear the costs of these proceedings personally, including the costs of the respondent and the applicant’s own costs.