WU RUFANG v. XIAO YONGRU t/a CHIEN KEE PLASTIC MATERIALS

DCEC 558/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 558 OF 2013

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D E C I S I O N

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INTRODUCTION

1.  By a written Decision handed down on 19 August 2016 (“Decision”), I granted the following costs orders (“Costs Orders”):

(1) “The respondent shall pay the applicant the costs (except the costs of the filing of the reply … of the entire proceedings up to and including 11 June 2015, which costs are to be taxed if not agreed. (“Order 1”)

(2) As from 11 June 2015, there shall be no order as to costs, including the costs of the hearing for the argument on costs. …, the costs of the hearing, … should be on nisi basis.” This order has since become absolute (“Order 2”).

2.  By summons filed on 15 September 2016, the respondent applies under s.63 (1) of the District Court Ordinance (“DCO”) and Order 58 r (2) of the Rules of the District Court (“RDC”) for leave to appeal against the Costs Orders.

3.  The background of these proceedings is set out in the Decision and it will not be repeated.  In gist, the Costs Orders arose from the parties’ disputes on costs after this court granted the applicant leave to discontinue the present proceedings against the respondent. For convenience, I would adopt in this decision, unless otherwise stated, the same nomenclature as in the Decision.

4.  The parties are represented by same counsel, Mr Cheung for the applicant and Mr Lau for the respondent.

A PREMININARY CONSIDERATION

5.  Since the subject Costs Orders were orders made in the employees’ compensation proceedings, the respondent by s.23[1] of the ECO should have an unqualified right of appeal to the Court of Appeal without leave.  As the parties seemed to have not directed their attention to s.23 of the ECO, I invited the parties to make submissions, and referred to them the case of Tsang Chi Chung v Yu Kin San t/a Yu’s Trading Co & Anor [2016] 4 HKC 573 – a recent decision of mine dealing with s.23 of ECO.    

6.  Counsel have furnished written submissions on the question of leave, and they suggested that since the subject intended appeal involves costs, leave to appeal , according to a Court of Appeal decision of 譚耀煇(Tam Yiu Fai (transliteration)) v Aberdeen Marina Holdings Ltd[2] discussed in Tsang Chi Chung,should be required.

7.  In Tam Yiu Fai, the Court of Appeal held that an appeal against a costs order made in a summons of an employees’ compensation proceeding required leave, and stated that as a costs order falls under “the law, rules and practice” of the High Court, it does not “involve substantive questions of law but the exercise of the judge’s discretion”:  Tam Yiu Fai at para 8 referred to in [2016] 4 HKC 573 at 579.

8.  In Tsang Chi Chung, I have referred to a Court of Appeal decision[3] after Tam Yiu Fai, in which the Court of Appeal appeared to have held the view that a party has (save for the situations expressly provided for in s.23) an unqualified right to appeal according to the meaning of 23 of the ECO.

9.  In spite of the more liberal interpretation of the meaning of s.23 in a later Court of Appeal decision, I consider that until the Court of Appeal provides guidance as to whether s.23 of ECO also applies to an order on costs, it would be prudent, in light of Tam Yiu Fai which I have considered in Tsang Chi Chung, to proceed, as the parties also agree, with the respondent’s application on the premises that leave to appeal is required.

LEGAL PRINCIPLES GOVERNING THE LEAVE APPLICATION

10.  Both counsel in their written skeletons have helpfully summarized the applicable legal principles in relation to an application for leave to appeal against a costs order. They are trite and can be briefly set out below.

11.  First, by virtue of s. 63A (2) of the DCO, leave to appeal shall not be granted unlessthe court is satisfied that (a) “the appeal has a reasonable prospect of success”; or (b) “there is some other reason in the interests of justice why the appeal should be heard.”

12.  Second, leave to appeal under s. 63A (2) of the DCO is not lightly granted.  A reasonable prospect of success means an appeal with prospects that are more than fanciful but which do not need to be shown to be “probable”: SMSE v KL[2009] 4 HKLRD 125, applied by Yuen Oi Yee Lisa v Charoen Sirivadhanabhakdi & Ors (unrep), HCMP 3305/2015, 18 February 2016, per Poon JA at para 9.

13.  Third, since the respondentis appealing against costs orders, he needs to demonstrate that this court either (a) failed to exercise its discretion in the award of costs; or (b) exercised such discretion upon a false principle; or (c) was demonstrably flawed in such exercise of discretion:  Hong Kong Civil Procedure 2017, Vol. 1 (“HKCP”), para.62/2/11.

14.  Fourth, even if the Court takes the view that there is a reasonable prospect of success, it still retains discretion as to whether to grant leave, although the fact that there is, ex hypothesi, a reasonable prospect of success would heavily influence the court’s exercise of discretion: HKCP, para.59/2A/4.

PROPOSED GROUNDS OF APPEAL

15.  When the summons was heard, the respondent had, by Mr Lau’s written skeleton (at para 22), expressly abandoned his intended appeal against Order 1, and only pursues his intended appeal against Order 2 in asking the Court of Appeal to grant costs to the respondent.  The respondent, by his “Amended Draft Notice of Appeal” (“Amended Draft Appeal”) annexed to Mr Lau’s written skeleton, also revised his original proposed grounds of appeal by reducing the grounds of appeal from eight to three grounds.

16.  The three grounds of appeal against Order 2, according to Mr Lau’s oral submission, are broadly two. The first broad ground relates to Grounds 1 and 3, which concern the Consent Order. The respondent contends that this court has erred in not taking into account the effect of the Consent Order, where it was satisfied that the applicant “has a strong case against the respondent in both liability and quantum", when the Consent Order has the effect of a full and final settlement of the applicant’s claim in the PI Action being reached.

17.  The next broad ground is Ground 2, which is about the 3 cheque payments disclosed in the applicant’s list of documents to which this court made reference when discussing the applicant’s merits on quantum. It is averred that this court has erred in law in holding that the 3 cheque payments (in the total sum of HK$25,650) (paras.41-43 of the Decision) received by the applicant could constitute evidence of monthly income of the applicant.

GROUNDS 1 AND 3: EFFECT OF THE CONSENT ORDER

Ground 1

18.  In Ground 1 of the proposed grounds of appeal, the respondent seems to be submitting that this court has erred in not holding that the applicant’s claim was extinguished by the Consent Order.

19.  Sub-paragraphs (a) and (b) of the respondent’s Amended Draft Appeal Ground 1 seem to relate to Mr Lau’s arguments on the extinguishment of the applicant’s claim by common law and by statute, which arguments are not easy to follow. If I were to understand Mr Lau’s arguments correctly, he seems to be suggesting (paras 11 and 15 of Mr Lau’s skeleton) that the wording of the Consent Order (by its express reference to the Advance Payment the applicant had received as “Employees’ Compensation”) has the effect of bringing about a complete settlement of the applicant’s claim.  It is suggested that I ought to have held that the merits of the applicant’s case (which this court has found to have existed) had been overtaken by the Consent Order , which had the effect of extinguishing the applicant’s claim (see para 11 of Mr Lau’s skeleton) not only under common law but also by statute.

20.  The extinguishment of the claim by common law seems to be premised on Mr Lau’s submission (para 8 of the Skeleton) that “once a settlement is reached between the [applicant] and a third party torfeasor, which settlement encompasses [the applicant’s] present claim for compensation against [the respondent], the claim under the EC Application against [the respondent]) ought to have been extinguished”.  Mr Lau further cited the English House of Lords decision of Jameson v Central Electricity Generating Board[4] to support his argument.  This submission seems to form the basis of the respondent’s Ground 1(a) of the Amended Draft Appeal, which states : “the [a]pplicant’s claim against the respondent has (at least) on that date [i.e. the date of the Consent Order] been (sic) extinguished of the applicant’s claim against the respondent”.

21.  The statute Mr Lau relied on to support his argument of statutory extinguishment of the applicant’s claim is s.25 of the ECO. Referring to the provision of s.25 (2), ECO, that obliges an employee to notify the employer in the event that an employee settles his claim for damages, and s.25 (3) (b) (i) of the ECO on the consequence upon an employee’s failure of notification, Mr Lau submits that even if the applicant were assessed to have demonstrated a strong case for recovering a sum of $427,000, it was still less than the settlement sum under the Consent Order. Pursuant to s.25 (3) (b) (i) of the ECO, it was submitted, “the effect of the Consent Order would render no compensation payable to [the applicant]” (para 14 of Mr Lau’s Skeleton).

22.  Thus, in  Ground 1(b) of the Amended Draft Appeal, the respondent states that “[b]y reason of the failure on the [a]pplicant’s part in notifying the [r]espondent of the settlement as required by [s] 25(3)(b) of the [ECO]and that the [a]pplicant’s best case against the [r]espondent could only entitle the [a]pplicant an award less than what the [a]pplicant received in the said settlement, no compensation ought to be payable by virtue of [s]25(3)(b)(i)”.

Ground 3

23.  Ground 3 also relates to the alleged settlement of the applicant’s claim by the Consent Order but it is based on a different footing. It is based on the same argument of accord or satisfaction Mr Lau advanced (but failed in) in the substantive costs arguments.  It is stated that this court has erred in failing to hold that the Advance Payment received by the applicant “as employee compensation in the settlement of the PI Action constitute accord or satisfaction of the [a]pplicant’s claim in the EC Application”.

GROUND 2: THE 3 CHEQUE PAYMENTS COULD NOT CONSTITUTE EVIDENCE OF THE APPLICANT’S MONTHLY INCOME

24.  In para 41 of the Decision, this court has referred to three cheque payments stated in item 18, Part 1, Schedule 1 of the applicant’s list of documents filed on 6 September 2013 when evaluating the merits on quantum, and stated that these documents might be supportive of the applicant’s wages . The respondent contends in Ground 2 of the Amended Draft Appeal that these payments could not constitute evidence of the applicant’s wages for the reasons that: (a) these payments have not been affirmed by the applicant; (b) there was no cross-examination of the applicant; and (c) the respondent was not provided an opportunity for adducing evidence to dispute the nature of these cheque payments.

WHETHER REASONABLE PROSPECTS OF SUCCESS?

25.  I am not satisfied that the respondent has reasonable prospects of success in respect of his intended appeal in any of his proposed grounds of appeal.

Ground 1 – extinguishment of claim by the Consent Order

26.  In advancing this proposed ground of appeal by suggesting that the Consent Order has the effect of extinguishing the applicant’s claim, the respondent seemed to have forgotten that the applicant, shortly after the Consent Order, made an application to discontinue these proceedings.  The Consent Order only rendered it unviable for these proceedings to continue as the applicant would not have been able to receive double recovery for compensation in respect of the same injury in both these proceedings and the PI Action. The express reference in the Consent Order to the Advance Payment the applicant had received, in my view, is no more than a spelling out of the total monetary recovery that the applicant received for the injury he suffered in the accident, but definitely did not have the effect the respondent contends for.

27.  In a nutshell, therefore, insofar as the effect of the Consent Order is concerned, it has achieved a full and final settlement of the applicant’s claim in the PI Action (which the respondent has correctly stated in Ground 1) and rendered the continuation of these proceedings non-viable (due to the prohibition against double recovery) but has not extinguished the applicant’s claim, whether under common law or by statute. The arguments put forward in Ground 1 are, in my view, totally misconceived.

28.  For completeness, I also do not consider that Jameson, which Mr Lau cited, is relevant. The part that Mr Lau relied on in Jameson (at [2000] 1 A.C. 455 471H-473G) is about the recitation by Lord Hope (at 471H) of a trite common law principle that “the plaintiff cannot recover more by way of damages than the amount of this loss”.  In Jameson, the Court decided that where a tort involves concurrent tortfeasors, a full and final settlement of a plaintiff's claim with one of the tortfeasors would extinguish his claim against all of them. 

29.  Since the respondent in these proceedings is not a concurrent tortfeasor, Jameson clearly has no application to the present case.

30.  The statutory extinguishment of claim argument is, in my view, equally bad. I do not think that Mr Lau has properly understood my discussion on the relevant provisions of s.25 of the ECO. In paras 62 to 64 of the Decision, it is mentioned that upon the applicant’s failure to notify the respondent of the settlement of the PI Action, the applicant might need to suffer a consequence of being ordered to repay the respondent the Advance Payment. However, such consequence did not arise in the present case as a result of the respondent’s relinquishment of the repayment of the Advance Payment that the respondent made to the applicant.  I therefore find Mr Lau’s submission (at para 14 of his skeleton) that “[p]ursuant to S.25 (3) (b) (i), the effect of the Consent Order would render no compensation payable” is wholly unsustainable.

Ground 3 – settlement by accord and satisfaction

31.  In paras 47 to 54 of the Decision, Part J, I have discussed at length Mr Lau’s “accord and satisfaction” arguments,  and stated my reasons for rejecting them.

32.  The respondent seems to repeat the same arguments that I have rejected.  Despite Mr Lau’s valiant effort in straining the arguments by advancing a seemingly new argument in submitting that the wording of the Consent Order, when properly construed, would constitute “accord and satisfaction” of the applicant’s claim against the respondent, I do not find that this ground has good prospects of success.

33.  Whilst the averment of “accord and satisfaction” was never pleaded in the respondent’s answer (as Mr Cheung has pointed out),  Mr Lau’s repetition of the same failed arguments, in my view, only renders his ground of appeal more hopeless and is “not reasonably arguable”.

Ground 2 – cheque payments

34.  I do not consider that this ground of appeal about the court’s referring to the cheque payments has a reasonable prospect of success.  It is common ground that when this court was tasked with resolving the parties’ disputes on costs without a trial, the court’s function, undisputedly, was to assess merits on a broad-brush approach (Decision: para 29).  In advancing this ground of appeal, the respondent is clearly mistaken in thinking that the court had undertaken a full-blown trial, when it clearly had not. There is no finding on disputed evidence as the respondent has mistakenly stated.      

35.  In the event, the reference to the cheque payments would have made no difference to the court’s assessment on quantum as Mr Cheung submitted. It was suggested that even if the calculation of the quantum had been based on the unusually low daily wage of the Son at the rate of the alleged $300 (instead of the $800 the applicant asserted), the applicant would have also been able to demonstrate that he would have likely been awarded compensation over and above the Advance Payment of $80,000.

36.  If the amount of $800 (the applicant’s asserted daily wage Mr Poon adopted) were to be substituted by $300 for the calculation of the compensation (by using the same formula as per the Decision, footnote 8), the amount of the compensation would have been $193,649 (s.9 compensation: $300 x 26 days x 72 x 14% = $78,624; plus s.10 compensation: $300 x 456 x 4/5 = $109,440; and plus the amount of the s.10A compensation of  $5,585).

37.  The adoption of the reduced daily wage of $300 would undoubtedly lead to a substantial reduction of the amount of the likely compensation Mr Poon has calculated on behalf of the applicant. However, Mr Cheung is right in stating that had the court calculated the compensation by adopting the respondent’s asserted daily wage of $300 of the Son, the applicant would still have likely, after giving credit for the Advance Payment of $80,000, recovered an award of $113,649 in these proceedings.

38.  It is therefore evident from the above calculation that the respondent’s complaints on the court’s reference to the cheque payments, even if they were justified, did not have any influence on the court’s conclusion on its evaluation of the merits on quantum.

CONCLUSION AND DISPOSAL

39.  In conclusion, for the reasons stated above, I am not persuaded that the respondent has shown a reasonable prospect of success by demonstrating that this court has failed to exercise its discretion properly.   Neither has he put forward any other reason why the appeal should be heard.  I therefore dismiss the respondent’s summons with costs, on a nisi basis, to the applicant with certificate for counsel, to be taxed if not agreed.  The applicant’s own costs are to be taxed in accordance with the Legal Aid Regulations.