LAW CHUNG TAI v. SUN PROFIT LOGISTICS (HK) LTD AND ANOTHER

DCEC 606/2019

[2020] HKDC 544

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 606 OF 2019

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DECISION

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A.   INTRODUCTION

1.  In these employees’ compensation proceedings, the applicant claims against Sun Profit Logistics (HK) Limited (“Sun Profit”) in relation to a personal injury he allegedly suffered in an accident in the course of employment on 12 September 2018.  Falcon Insurance Company (Hong Kong) Limited (“Falcon”) was Sun Profit’s insurer.

2.  Sun Profit has not participated in these proceedings.  In default of an answer Sun Profit was ordered to serve, this court, at the second directions hearing on 20 December 2019, entered interlocutory judgment (“Interlocutory Judgment”) against Sun Profit.

3.  Later on the same day, Falcon issued a joinder summons (“summons”), seeking leave to be joined as the 2^nd Respondent in these proceedings.

4.  The applicant vigorously opposed Falcon being joined to contest liability, but took a neutral stance in relation to quantum.

5.  This court directed the paper disposal of the summons.  As Sun Profit did not appear at the call-over hearing of the summons on 3 April 2020 albeit having been served, I dispensed with the service of the affidavits and submissions on it.

6.  Falcon and the applicant are respectively represented by their counsel Mr Leon Ho and Mr Ivan Lee, and their submissions were lodged.

B.   APPLICABLE LAW AND UNDISPUTED LEGAL PRINCIPLES

7.  This summons was issued pursuant to s 43(3) of the Employees’ Compensation Ordinance (“ECO”); r 24(1) of the Employees’ Compensation (Rules of Court) Rules; and O 15, r 6 of the Rules of the District Court, which provisions empower a court to order an insurer to become a party to the proceedings as if the insurer was the employer.  A court may allow a party to be joined if it is satisfied that joining such party is necessary to ensure that all questions or issues in dispute “would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter”: O 15 r 6(2)(b), Rules of the District Court.

8.  Even if Falcon were able to satisfy the above statutory requirements, its seeking to be joined is not as of right but still subject to the court’s unfettered discretion Tugu Insurance Co Ltd v Woo Kin Wah & Ors[1], followed by Shing Ho Wa, a Mentally Incapacitated Person by his Mother and next Friend, Lam Wai Fong v Really Super Ltd (formerly known as Bruce Law Stunts Ltd & Another[2].  In the exercise of its discretion, a court has to consider all the relevant circumstances of the case: Shing Ho Wa at §45.

9.  In his skeleton, Mr Ho referred to a decision of Deputy High Court Judge Kent Yee in Wong Shan Shan & Another v The Incorporated Owners of Yue Wah Mansion & Anor[3] in which the learned Deputy Judge took the view (§§31 – 33) that there was no requirement for the intervener to show merits in a joinder application.  Given the fact that Interlocutory Judgment has already been entered, I do not think that this case is applicable.

10.  Rather, I believe that the facts of this case are more akin to Wong Kam Fai v Yu Sai Wan and Ors[4] cited by Mr Lee.  Similar to the present case, in Wong Kam Fai, default judgment had already been entered against the respondents (the employers) before the insurer applied to join in the proceedings pursuant to section 43(3) of ECO. The District Judge held (at 75, L10) that though the insurer in general should have the right to challenge the employment relationship under section 43(3) of ECO, its right, however, “must be affected by the default judgment entered against the 1^st and 2^nd respondents on liability”.  As there was no application to set aside the default judgment, the District Judge only granted leave to the insurer to deal with the assessment of compensation.

11.  It should also be noted that, when exercising a court’s discretion, an insurer’s liability to an employee, according to the compulsory insurance for employees provided in Part IV, ECO (under which Part s 43 forms part of), will accrue only after an employee’s compensation is quantified.

C.   WHETHER FALCON SHOULD BE JOINED?

C.1   To challenge liability

12.  There is one special background fact in this case that I ought to mention at the outset as it was specifically mentioned and relied upon by Falcon’s supporting affidavit in the 2^nd affidavit of Li Zhiyuan (Falcon’s handling solicitor).  Apart from the present proceedings, Sun Profit was also sued by three other alleged employees in three other different employees’ compensation cases, all of which were commenced in 2019 - they are respectively DCEC 1509, 1699 and 1835 (of 2019). The alleged accident dates were all in September 2018 but for one case which was in August 2018[5].

13.  Falcon was the insurer in respect of these cases, and it relied on them to state that this number of actions appeared to be unusual and extraordinary.

14.  Coming back to this case, there is no dispute that before the issue of this summons, Falcon received on 28 March 2019 the notice of these proceedings through the applicant’s former solicitors and knew the nature of the applicant’s claim against Sun Profit.  Before the first directions hearing, Falcon repudiated its liability under the relevant insurance policy by its notice to Sun Profit on 23 July 2019.

15.  Falcon, upon being served with the order made at the first directions hearing on 23 August 2019, knew that Sun Profit was absent from the hearing and the court ordered it, among other things, to serve an answer to the claim.

16.  Before the second directions hearing on 20 December 2020, Falcon was able to obtain the consent of the applicant’s former solicitors in relation to its joining in these proceedings.  However, due to some procedural oversight, Falcon was only able to issue the summons after Interlocutory Judgment was entered, albeit on the same day.

17.  Irrespective of the unfortunate oversight on the part of Falcon’s solicitors, the inevitable reality Falcon now faces is that the Interlocutory Judgment is valid and enforceable.  According to Wong Kam Fai, Falcon’s only interest should therefore be limited to that of the quantum of the compensation.  I reject Mr Ho’s submission (at §20) that the Interlocutory Judgment is not a relevant factor.

18.  I echo the view of the District Judge in Wong Kam Fai in relation to the consequence of the insurer’s losing its entitlement to re-open the issue of liability as a result of an absence of an application to set aside the default judgment in that case.  Likewise, in the present case, Falcon, having learnt of the Interlocutory Judgment on 3 April 2020[6], and despite its apparent suspicion of the claim due to the special feature that I outline in §§12 and 13 above, has never put forth any arguments challenging the validity of the Default Judgment.  In the circumstances, I accept Mr Lee’s contention that Falcon’s right to challenge liability is lost by virtue of the Interlocutory Judgment.

C.2   On quantum

19.  As for the remaining issue regarding quantum, the applicant has not objected to the joinder.

20.  The proceedings have progressed to a stage whereby the applicant was already re-examined by the Medical Assessment Board of the Labour Department upon the applicant’s review of the first assessment certificate (Form 7), and the Medical Assessment Board issued a review certificate by way of Form 9.  According to the said Form 9, the applicant suffered a foot injury that led to the amputation of two of his toes. He was assessed to have suffered 9.5 percent loss of earning capacity.

21.  Sun Profit has up till now never participated in these proceedings, and will unlikely do so.  Given the fact that the applicant has no earning records, I consider that it is just to allow Falcon to join in the proceedings to enable it to vigorously examine the veracity of the applicant’s case on quantum, including, if necessary to seek a medical expert to challenge the re-assessment stated in Form 9 notwithstanding the confirmation that the applicant has stated in his witness statement that he would no longer take issue with the Form 9 assessment.

22.  For these reasons, I grant leave to Falcon to join in these proceedings in relation to the assessment of compensation.

D.   ORDER AND DIRECTIONS

D.1   Order

23.  I grant the following order: -

(1)  Leave to Falcon to be added as the 2^nd respondent in these proceedings.  Corresponding amendments be made to the names of the respondents in all subsequent proceedings;

(2)  Falcon is only entitled to participate in and deal with the question of quantum of compensation;

(3)  A costs order nisi that Falcon do pay the applicant 50 percent of the costs of the summons in any event, and the remaining 50 percent of the costs be in the cause of the assessment of compensation.  These costs shall include all costs reserved together with certificate for counsel.

(4)  If no application by summons for the variation of the costs order nisi is made within 14 days, this costs order nisi shall stand absolute.

D.2    Case Management Directions

24.  In view of Sun Profit’s absence, and in light of the prevailing Covid-19 pandemic, I direct that all future case management directions be disposed of, unless otherwise directed, on paper by this court in lieu of directions hearing.  I grant the following directions: -

(1)  Falcon do within 28 days file and serve (i) a mediation certificate and (ii) a list of documents.

(2)  Should Falcon wish to appeal against Form 9, it should file and serve a summons within 28 days for leave to appeal out of time;

(3)  Falcon do, if necessary, file and serve within 56 days, a witness statement as to quantum;

(4)  The applicant and Falcon do within 70 days submit to court and serve on Sun Profit a joint written application, seeking further case management directions.