CITY SCAFFOLDING FACTORY LTD v. LEUNG MAN YI

DCEC 1944/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1944 OF 2015

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REASONS FOR DECISION

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A.　SECTION 6D(9): ITS REGIME

1.  These proceedings are brought under s.6D(9) of the Employees’ Compensation Ordinance in respect of a fatal accident caused to the applicant’s employee. All references to statutory provisions in this decision, unless otherwise stated, are references to this Ordinance.

2.  Section 6D(9) provides: -

“A Certificate of Compensation Assessment for Fatal Case [“Form 21 certificate”] or Review Certificate of Compensation Assessment for Fatal Case [“review certificate”], other than a Certificate cancelled under subsection (7) may, on application to the Court by the employer, any person named in the Certificate, or the ECAFB, be made an order of the Court, and for the purposes of this subsection, the amount payable under any such Certificate shall include any surcharge payable under subsection (3)[1].” (underline is added)

3.  Section 6D(9) provides a mechanism by which the determination and apportionment of compensation made by the Commissioner for Labour (“Commissioner”) in a non-contentious fatal claim may be brought before the court in some situations as those described in para 7 below.

4.  In a fatal case, when the employer’s liability to pay compensation and the relationship of the family members are not in dispute, and the parties agree to the Commissioner conducting the determination, the Commissioner may, pursuant to s.6B(1)(a), determine the compensation payable and apportion it to the eligible family members with reference to Sch 7. The Commissioner’s determination and apportionment are recorded in writing by the Commissioner’s issuance of a Form 21 certificate pursuant to s.6B(1)(b).

5.  Once the Form 21 certificate is issued, subject to the provisions for objection and review in s.6D (4) and (5), the payment of compensation by the employer, pursuant to s.6D(1), must be made not earlier than 42 days and not later than 49 days (“Payment Period”) after the date of issue of a Form 21 certificate or a review certificate issued by the Commissioner on receipt of an objection or on a review (s.9D(6)). In the event of failure to make payment within the Payment Period “without reasonable excuse”, surcharges in the amounts specified in s.6D(3) apply.

6.  The compensation payable by the employer, in accordance with s.13(1)[2], is not required to be paid to the court.  In the circumstances, employers are able to settle fatal cases by making direct payment of the compensation payable to the person(s) named in a Form 21 certificate without invoking a s.6D(9) application to the court.

7.  Thus, most of the claims for fatal cases are settled by this simple and straightforward way without any court’s involvement. However, in situations where an employer needs the court to give directions in regard to payments involving disability interest and for avoiding paying the sub.s.(3) surcharge in the event of late payment, s.6D(9) would need to be invoked due to a lacuna in the existing statutory regime in respect of compensation in fatal cases involving disability interests. Chantex Engineering Limited v Vu Ngoc Dung & Le Thuy Linh, the members of the  family of the deceased Le Ba Khoa and 2 other cases heard together[3] is one of those cases in which the employer had engaged s.6D(9) for such purpose in relation to payments involving minority interests.

8.  Similar to Chantex, the instant s.6D(9) application was also made by the employer involving a minority interest.

B.　THE INSTANT APPLICATION

9.  In the instant case, the Commissioner issued a Form 21 certificate (“Certificate”) on 21 August 2015 as a result of the fatal accident that resulted in the death of Leung Ho Tin, the deceased. According to the Certificate the solicitor (Miss Lam) for the employer (the applicant) exhibited to her affidavit which was later filed pursuant to the direction of the court (see para 14 below), the Commissioner determined the total amount of compensation payable and apportioned the compensation by naming in the Certificate the deceased’s mother (“Mother”) and sister (“Sister”) as the persons to whom the compensation was payable.  

10.  To avoid the liability for the statutory surcharge due to late payment, the employer would need to pay the assessed compensation, pursuant to s.6D(1) within the Payment Period, i.e. between 2 October and 9 October 2015.

11.  In respect of the compensation payable to the Sister, the employer was unable to make direct payment as she was a minor. The employer thus issued the s.6D(9) application on 17 September 2015; and in order to avoid liability for paying a surcharge for late payment, also on 2 October 2015 made a sanctioned payment pursuant to O.22 of the Rules of the District Court (“RDC”) for the entire amount of the Sister’s compensation determined by the Commissioner plus interest.

12.  By summons filed on 28 June 2016, the applicant applied, amongst other things, pursuant to s.6D(9) and O.80 r.12, RDC for an order that the Certificate be made an order of the court, and that the Sister’s compensation be paid to the Sister through the Mother from the sanctioned payment.

13.  Notwithstanding the non-contentious nature of the summons, the Deputy Judge who heard the summons on 15 July 2016 adjourned the hearing and directed that the provisions of O.80, RDC were to be complied with.

14.  After the hearing before the Deputy Judge, the parties took steps to comply with her directions by: (i) the applicant filing a supporting affidavit exhibiting, amongst other things, the Certificate; and filing an amended application upon having obtained leave to amend the title of the application; and (ii) the respondent filing the documents of consent to act by the next friend (which correct capacity the respondent’s solicitor later clarified to have been guardian ad litem) and a solicitor’s certificate in compliance with O.80, RDC.

15.  At the adjourned hearing before this court, I granted an order making the Certificate an order of the court and granted leave to the respondent to accept the sanctioned payment. Usual directions for the investment of the Sister’s compensation until the latter reached the age of 18 were also given.

C.　PROCEDURAL PROBLEMS

16.  The instant application was not, in my view, satisfactorily prepared in the following respects: 

(1) The title of the respondent.

Since the Sister was a minor, she should have been represented by a guardian ad litem. The applicant failed to observe O.80 r.2(3), RDC in that the title of the respondent was incorrectly (before the amendment) stated to be “Chiu Sui Ching (the name of the Mother) for Leung Man Yi (the name of the Sister)” in the instant application.

(2) The Certificate was not filed.

Since the applicant did not file the Certificate with the application or any supporting affidavit with the summons, the court was not provided with any supporting documents in relation to the s.6D(9) application.

(3) O.80 r.3, RDC was not complied with.

The respondent’s solicitors did not observe the provisions of O.80 r.3 by filing the Mother’s written consent to be the guardian ad litem and a solicitor’s certificate in compliance with O.80 r.3(8).

17.  Section 6D(9) applications such as the instant one are few and far between.  Hence, little guidance has been laid down by the court. In light of the problems that have been identified in the instant case, I consider that it would be useful to practitioners if general guidance with reference to the problems that have arisen in this case can be given.   

18.  Thus, with the parties’ consent to publish this decision, I highlight below a few general guidelines that practitioners should have regard to when preparing a s.6D(9) application with a view to avoiding or minimizing similar problems in future.  These guidelines are not intended to be an exhaustive guide, nor as hard and fast rules to be followed. 

D.　PROCEDURAL GUIDELINES: S.6D(9) APPLICATION

D.1　General: filing of the certificate

19.  Irrespective as to whether disability interests are involved (for example, a member of the family brings an application solely for the enforcement of the Commissioner’s relevant certificate), the certificate in relation to which the s.6D(9) application is brought must be filed together with the application.

D.2　Application must be made to court when involving disability interests

20.  Given that a person under a disability, whether he or she is a minor or a mentally incapacitated person (“MIP”) as defined in O.80 of the RDC is not able, as a matter of law, to give a valid receipt for compensation paid by the employer, and for the purpose of protecting disability interests, a s.6D(9) application must be made whenever the person to whom the compensation is payable is under disability.

D.3　Steps an employer should take involving disability interests

D.3.1　Making the application

21.  As observed by the Judge in Chantex Engineering Limited (at para 6[4]), a s.6D(9) application allows an employer to make an application to court to avoid liability for the sub.s.(3) surcharge arising from late payment of the compensation involving disability interest. In such a situation, an employer should promptly (as the employer did in the instant case) avail itself of s.6D(9) by applying to the court for an order in making the relevant certificate - Form 21 certificate or the review certificate - an order of the court, and of apportionment to be dealt with by the court under O.80 r.12, RDC.

D.3.2　Payment to court

22.  Apart from making the application, the employer should, in addition, make payment into court within the Payment Period in satisfaction of the payment obligation under s.6D(1). As held in Chantex, an employer is entitled to make payment into court to avoid the liability for a surcharge for late payment. Since s.6D(1) does not stipulate how compensable payable is to be made, the employer should be able to resort to the payment into court mechanism as a means to avoid the payment of a surcharge.

23.  The existing employees’ compensation regime is again silent as to how payment into court ought to be made.  After the Civil Justice Reform, payment by way of a sanctioned payment under O.22, RDC seems to have overtaken the payment into court mechanism specifically provided for in r.20 of the Employees’ Compensation (Rules of Court) Rules (“ECR”) that only allows a respondent to pay into court a sum “which is considered by him to be sufficient to cover his liability”.  Rule 20, ECR however is of limited application for the reason that it only provides for payment by a respondent. Thus, when the employer is an applicant who has instituted the application as in the instant case, r.20, ECR would not be applicable.  Under such circumstance, an O.22 sanctioned payment would seem to be the only available means by which a payment into court can be made (as the employer in the instant case did) albeit that the employer did not need to engage any of those consequences provided in O.22, RDC. 

24.  Thus, if an employer in a s.6D(9) application is a respondent, it would seem that a payment into court can be made either pursuant to r.20 of the ECR or by way of an O.22, RDC sanctioned payment upon the filing of the application. Whereas if the application is brought by the employer, an O.22, RDC sanctioned payment can be made.

D.4　Representation: through next friend or guardian ad litem, and representation by a solicitor

25.  Order 80 r.2(3), RDC provides, “[e]xcept where the Official Solicitor is acting as next friend or guardian ad litem, a next friend or guardian ad litem of a person under disability must act by a solicitor”.

26.  Accordingly, in the event that the applicant under disability brings the application without a next friend, the court will stay all further proceedings and until a next friend (who must be represented by a solicitor) is properly appointed and added. An application may be made by the respondent (employer) asking that a next friend be added (HKCP,para 80/2/2, pp1441-2).

27.  Similarly, a respondent under disability is not allowed to participate or appear in the proceedings except by his guardian ad litem (who is also required to be represented by a solicitor).

D.5　Prescribed form

28.  Irrespective of whether the application is brought by a named person in a Form 21 certificate or a review certificate, an employer, or otherwise, an application under s.6D(9), shall be, as much as practicable and with necessary modifications, in Form 3 (for general application) as specified in the Schedule to the ECR.

D.6　Title of the application

29.  Where a person under disability is an applicant, the title of the application should be A.B (the name of the named person under disability) by C.D. his/her next friend (the name of the next friend). 

30.  Conversely, where the person under disability is a respondent, he or she should be described as A.B (the name of the named person under disability), a minor or a MIP (as the case may be) by C.D, his/herguardian ad litem. 

D.7　Contents of the application     

D.7.1　Provide a concise statement in relation to the circumstances in which the application is made

(i) The nature of the disability (whether it is a minor or a MIP) of the person to whom compensation is payable;

(ii) The facts of the fatal accident met by the deceased arising out of and in the course of employment – giving the name of the deceased and the date of the death; and

(iii) Particulars of determination and apportionment made in the relevant certificate (Form 21 certificate or review certificate) by stating:-

(a) the total amount of compensation payable;

(b) the names of persons to whom the compensation is payable and the amount of compensation payable to each such person; and

(c) (if applicable) the names of persons who are not entitled to compensation.

D.7.2　The relief or orders in which the applicant claims

(i) An order that the relevant certificate be made an order of the Court pursuant to s.6D(9);

(ii) Compensation payable to the named person(s) under the application, including any surcharge payable under s.6D(3);

(iii) An order for payment out of the money paid into court by the employer;

(iv) An order for investment of money payable to persons under a disability; and

(v) Costs.

D.8　Documents to be filed

31.  The following documents must be filed:

(i) The relevant certificate referred to in sub-section D.7.1 para.(iii) above must be filed together with the application;

(ii) If the named person is a minor, the document proving the minor’s age such as an identity card or a birth certificate; and

(iii) The following documents specified in O.80 r3, RDC:-

(a)  a written consent to be next friend or guardian ad litem, as the case may be, of the person under disability;

(b)  a solicitor’s certificate in accordance with O.80 r.3(8)(c), RDC.

E.　HEARING NOT OPEN TO THE PUBLIC

32.  Pursuant to Sch. 2(2) to Practice Direction 25.1, any hearing concerned with disability interests (by virtue of O.80, RDC) or with the apportionment of compensation (under s.6A), disposal of compensation apportioned to dependents (under s.6H(6)) or distribution of compensation (under s.13) shall not be open to the public.

33.  Thus, whenever a s.6D(9) application relates to any of the situations mentioned in the preceding paragraph, the applicant’s legal representatives should inform the court at the earliest opportunity that the hearing of the application shall require to be heard in private so as to enable the court to make the necessary arrangements.

34.  Since such application is non-contentious, the parties should before the hearing of the application file a consent summons setting out the orders that the parties propose that the court should make. If the compensation payable is to be made to a person under a disability, the legal representatives for the latter should separately lodge a memorandum setting out sufficient information with proposed directions in accordance with O.80 r.12, RDC for payment out, application, investment or otherwise in relation to the payment of compensation for the benefit of the person under disability.