XCHRX CHEUNG WAI KWAN v. WAN PAK KEUNG t/a GOLDEN CITY ENGINEERING CO.

HCPI 521/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES NO. 521 OF 1999

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J U D G M E N T

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1. This an application to set aside a judgment entered on 6 July 1999 against the 2nd defendant in default of notice of intention to defend. The proceedings arise out of an accident sustained by the plaintiff on 24 May 1996 in the course of his employment with the 1st defendant. The 2nd defendant was the principal contractor on the site in question. The action was commenced by writ on 20 May 1999, just within the limitation period, and the 2nd defendant was served with the writ and statement of claim on 26 May 1999. No notice of intention to defend being filed and served, judgment in default was entered on 6 July 1999. This application was taken out on 1 December 1999.

2. The plaintiff claims in this action damages for personal injuries suffered by him in an accident at work. In his statement of claim, he says that he was a technician trainee employed by the 1st defendant at a site in Lo Shue Pai, Chai Wan, installing fire hoses at a height which required the use of an elevated metal platform on a metal frame with four lockable wheels at the bottom. In the course of carrying out this work it was necessary to move the platform from time to time to another location, and on one of these occasions, when he says that he was advised to stay on the platform as it was only being moved a short distance, the platform tilted, causing the plaintiff to fall to the ground, a distance of some 6-10 metres below. The 2nd defendant was, as I have said, the main contractor on the site. They had sub-contracted the fire hose installation work to BYME Engineering (HK) Ltd (BYME), who had sub-contracted it to Windmill Engineering Company Ltd, who in turn had sub-contracted it to the 1st defendant.

3. The plaintiff bases his claim against the 2nd defendant on a breach of the common duty of care under the Occupiers Liability Ordinance, breach of regulations under the Construction Sites (Safety) Regulations, Cap. 59 in failing to ensure that there was an adequate guardrail, failing to provide safety nets or safety belts, and seeing that they were used, and failing to exercise adequate supervision over the 1st defendant in the safe execution of the work.

4. The 2nd defendant now seeks to have the judgment set aside on the ground that it can show a defence which has merit and has an explanation for the failure to file and serve a notice of intention to defend, and for the delay in bringing this application.

5. Whether or not to set aside a regular default judgment under the provisions of Order 13, rule 9 is a matter entirely within the discretion of the Court, and it is accepted that there should be no rigid rules as to the application of that discretion. However, a number of authorities have set down guidelines over the years. The Saudi Eagle [1986] 2 Lloyd's Rep. 221, was one of the first to state the requirement for a defence to be not merely "arguable" as under Order 14, but must carry some degree of conviction and have some prospect of success. This was followed in Hong Kong in Yeu Shing Construction Co. Ltd v Pioneer Concrete (HK) Ltd [1987] 2 HKC 187, where Silke VP added, at p. 191:

The remedy is discretionary and it is incumbent upon a judge deciding an O 13 r 9 application to consider the reason why default judgment was entered in the first place, any delay that there may have been in applying to set it aside, and prejudice, if any, that might exist.

6. A similar decision was given in Premier Fashion Wears Ltd v Li Hing Chung [1994] 1 HKC 213 where Godfrey JA, while approving the approach in The Saudi Eagle, went on the say:

A defendant who seeks to set aside a regular judgment must at least show that his case has a real prospect of success. To do so, he must satisfy the court that his case and the evidence he has adduced in support of it carries some degree of conviction. It seems to me that unless potentially credible affidavit evidence from the defendant has demonstrated a real likelihood that he will succeed on fact, he cannot have shown that he has a real prospect of success.

7. What then is the defence put forward here?

8. In respect of the first basis of the plaintiff's claim, namely liability under the Occupiers Liability Ordinance, the 2nd defendant relies on the fact that it had employed a competent independent contractor and had thereby discharged its duty pursuant to section 3(4)(b) of that ordinance. Mr Wong for the 2nd defendant relies on the affidavit of Mr Leung Wai Kwong Daron (Mr Leung) in support of this contention, who says that BYME is a reputable firm well known in the field of electrical and mechanical works and in particular in the installation of fire hoses, and that they had satisfied themselves that BYME were competent. Hunter J in Yeung Kam Fuk v Len Shing Construction Co. Ltd & ors [1986] HKC 160 said that in cases where the defence relied on the employment of an independent contractor, one has to look at the circumstances as a whole to see if the occupier has taken such care as is reasonable, and sets out, at p. 168, four things which have to be looked at. These are:

(1) Has the occupier acted reasonably in entrusting the work to an independent contractor?

(2) Used reasonable care in selecting the contractor?

(3) Taken reasonable steps (if any are possible) to supervise the carrying out of the work?

(4) Used reasonable care to check (if possible) that the work has been properly done?

9. While there is no evidence that the 2nd defendant took any steps to supervise the contractor, there is certainly some that care was taken in its selection, and that it had expertise in this field. The evidence falls short of showing that there was any, or any proper supervision of the carrying out of the work. Certainly Mr Leung does not mention any. One is bound to suspect that this is the sort of case that, having handed over the work to a sub-contractor, who in turn appoints further sub-contractors, the main contractor stands back, satisfied that it has done everything necessary. This places the defence raised as arguable at this stage and no more.

10. As to the allegations of breach of the safety regulations, it is clearly arguable that the sort of work being carried out made it impractical to use safety belts or have safety nets, and the only real argument here is as to the provision of a guardrail. The evidence is not clear. All we have are the witness statements of the plaintiff's team leader in the work, Ng Kwok Fai, and a number of photographs. Ng Kwok Fai is adamant that there was a guardrail which complied with the regulations, and I have to say that, without better explanation of the photographs, I would not be prepared to say that they do not show a guardrail. On the matter of the regulations, it is certainly possible that the 2nd defendant has a defence which has more than a fair chance of success.

11. But there are two other matters upon which the 2nd defendant relies to say that he should be allowed to come in and defend. The first of these is the question of contributory negligence. The particulars of what the 2nd defendant says amounts to contributory negligence are set out in the draft defence submitted, and amount to an allegations of failing to wear a safety belt, of failing to descend from the platform while it was being moved, and generally failing to take care of his own safety. If I had to decide this matter solely on this basis I would consider the evidence of contributory negligence falls far short of the degree of conviction necessary for the exercise of the court's discretion in favour of the 2nd defendant. That as to the safety belts is vague and contradictory, and it is clear that it was not his sole decision to remain on the platform, but also that of his superior and team leader. As a trainee, he could hardly be criticized for following his example and considering it safe to do so.

12. The second matter is the apportionment of liability between the two defendants. Were I to allow this judgment to stand, the plaintiff would be free, if he was so advised, to discontinue against the 1st defendant and proceed to recover 100% against the 2nd defendant, leaving it with the possibility of a separate action as its only recourse to apportion blame. A notice of contribution and indemnity has already been filed by the 2nd defendant against the 1st, and this issue can be pursued in these proceedings with little prejudice to the plaintiff.

13. I am conscious of the fact that this is a personal injury action. As such the issues are usually not such as can be determined by clear evidence in advance of hearing the parties' oral accounts of the events which gave rise to it, or from documentary evidence carefully recorded. It is unfortunate that in this case there was no more thorough investigation by inspectors from the Labour Department. But this was in so small measure the fault of the plaintiff, who declined to give a statement to them.

14. Having considered all the circumstances of this matter, I am of the view that it would not be in the interests of justice to deny the 2nd defendant the opportunity to defend this action, not only on the question of the defences raised, which might have been stronger, but on that of the relationship with the other defendant and the apportionment of liability, if any, between them. The proceedings were only commenced in 1999, and, although there will inevitably be some small delay in proceeding to trial, which there would not otherwise have been, this is not something which the plaintiff can strongly pray in aid given the length of time it took him to commence these proceedings after the accident.

15. The only other matter which I am bound to consider is the reason for the default and the delay, if any, in bring this application. The 2nd defendant was served with the writ in May 1999 and, Mr Leung tells us, immediately began to make investigations, as they had no knowledge of the accident until then. They also believed for some reason, although no attempt seems to have been made to confirm it, that the sub-contractors insurance covered them and that the insurers would deal with it. The investigations continued at rather a slow pace, by way of enquiries to the sub-contractor BYME until early October 1999 when the 2nd defendant's solicitors were consulted for advice. It was only then, it appears, that they discovered that interlocutory judgment had been entered against them. There is no evidence before me at all that the judgment was served on the 2nd defendant before that.

16. I have no sympathy at all for the 2nd defendant in respect of the judgment itself. For a large international company, which I believe the 2nd defendant is, to take no action to protect their position after service of a writ on them seems to me to amount to negligence. I have no evidence as to who saw this writ and made the decisions on it, or why it was not immediately referred to their own legal department. While a layman might be forgiven for not appreciating the importance of legal documents, a large company with access to legal advice immediately has little excuse.

17. Having said that, it is not a case of deliberately ignoring the writ. I accept that enquiries were ongoing, and it was only for the inexplicable matter of it the person dealing with it not seeking advice, that it was not proceeded with and a notice of intention to defend filed. Had this been a more borderline case, I would take this into account in favour of the plaintiff, but I do not consider it such to say that the 2nd defendant should not now be heard on the merits. As to the delay after judgment, there has been no evidence that the judgment was served on the 2nd defendant at all, or at least not until October 1999 at the earliest. The delay after that was less than two months, and this, while not proceeding as fast as one might like, again is not such as to affect my views of the case and the circumstances as a whole.

18. There will accordingly be an order that the judgment be set aside and the 2nd defendant have leave to file and serve a notice of intention to defend and a defence within 14 days. There will also be an order nisi that the 2nd defendant pay the costs of the plaintiff in any event in respect of this application and the costs thrown away by the entering of judgment.