LAW CHING YU v. CHENG KWOK WING LEO t/a SECURITY CONSULTANT & ENGINEERING CO.

DCEC 2750/2015
[2018] HKDC 140

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2750 OF 2015

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D E C I S I O N

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A.　INTRODUCTION

1.  In these proceedings, the legally-aided applicant (“Applicant”) instituted an employees’ compensation application (“Application”) against the respondent, “Cheng Kwok Wing Leo trading as Security Consultant & Engineering Co” (“Respondent”) for employees’ compensation pursuant to the Employees Compensation Ordinance (“Ordinance”) in respect of an accident on 2 April 2014 (“Accident”) allegedly arising out of and in the course of employment. 

2.  This is an application (“Amendment Application”) by the Respondent in these proceedings for leave to amend its answer (“Answer”) filed on 5 February 2016.

3.  The Respondent, represented by its sole-proprietor, Mr Cheng, has in these proceedings in fact filed most of the documents, including the Answer, in English despite having been acting in person. It will thus be more convenient to deliver this judgment in English.  An interpreter will be arranged to interpret this judgment to Mr Cheng when it is handed down. 

B.　THE AMENDMENT APPLICATION

4.  The Amendment Application came about in quite a roundabout way.  It was first purportedly made by the Respondent by attaching a draft proposed amended answer to its time summons (“Time Summons”) filed on 22 February 2017 for time to file and serve its witness statement.

5.  Notwithstanding that the Amendment Application was not properly issued, this court, having regard to the more relaxed procedure provided in  r.19[1] of the Employees’ Compensation (Rules of Court) Rules (“EC Rules”), was content to treat the Amendment Application as having been formally made. 

6.  As the Applicant objected to the Amendment Application, this court gave directions for the hearing of substantive arguments and further disposed of the Time Summons by granting the Respondent time to file and serve the witness statement within 42 days of the handing down of this Decision.    

7.  The Amendment Application however has not proceeded speedily. The hearing on 10 May 2017 fixed for the disposal of the Amendment Application was adjourned after much of the hearing time was spent in resolving the arguments concerning an affirmation that the Respondent filed without leave shortly before the hearing.  Unsatisfactorily, the progress of the disposal of the Amendment Application was stalled when the proceedings were stayed twice on 7 July and 4 September 2107 consequent on Mr Cheng’s applications for legal aid. In another hearing on 18 October 2017, the court granted an adjournment upon the Respondent’s application for an adjournment to enable him to obtain legal advice.

8.  By the time of the last hearing held on 9 January 2018, the earlier 37-page long draft amended answer attached to the Time Summons has since been substituted by a shorter (24 page) draft proposed amended answer (“Proposed Answer”). The Proposed Answer, on this occasion, was attached to another time summons of the Respondent dated 3 July 2017 (“July Summons”) for a time extension to submit a new draft proposed amended answer to replace the previous one (which, according to the direction by this court on 10 May 2017, should have been submitted within 28 days). 

9.  The July Summons is certainly a misnomer for the Amendment Application for the entire arguments are more concerned with whether leave should be granted to the Respondent to file and serve the Proposed Answer, and not so much with the question of a time extension.

C.　GOVERNING PRINCIPLES

C.1　According to the Rules of the District Court

10.  The principles governing an amendment of a pleading are provided for in Order 20.  Broadly stated, amendments should be allowed “for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings[2].

11.  A pure undue delay in the making of an amendment application is not sufficient to bar an application to amend[3].

12.  However, if  an undue delay is unexplained, the court may disallow amendments that are vague and unsound[4].

13.  When making this Amendment Application, the Respondent, as shown from the discussion regarding the genesis as to how the Amendment Application came to be brought, did not give reasons as to why the application was only made more than one year after the Answer was filed.  Accordingly, the Respondent will need to persuade me that the proposed amendments in the Proposed Answer are clear and sound before I should exercise my discretion in its favour to amend.

C.2　According to the statutory objectives

14.  The statutory objectives of the Ordinance, according to the Court of Final Appeal in LKK Trans Ltd v Wong Hoi Chung[5] ,is to provide “a no-fault scheme aimed at giving quick financial relief to employees incapacitated by work-related injury”[6].

15.  In line with the statutory objectives, the Ordinance provides a deeming provision in s.5(4) by deeming an accident arising in the course of an employee’s employment, in the absence of evidence to the contrary, to have arisen out of the employment. Thus, a respondent in employees’ compensation proceedings should only “focus on the circumstances of the claimant’s employment in which the injury arose[7]”, and keep any disputes on liability within the strict confines of the statutory perimeter,  which will be further particularized in Section F below. 

16.  Hence, the EC Rules made pursuant to the Ordinance mandate a simple system for the practice and procedure of employees’ compensation proceedings.  As to the mode by which an opposition to a claimant’s application can be made, it is strictly prescribed by r.17(2)[8] of the EC Rules, which provides for the opposition to be in the prescribed Form 5 under a heading of “Respondent’s answer to Notice”. In the prescribed format, a respondent should only set out its grounds of opposition by way of “a concise statement” in stating “the extent and grounds of opposition”.   It is thus abundantly clear that a defence pleading format commonly used in civil proceedings is not in line with these statutory objectives.

17.  Accordingly, the Proposed Answer shall be required to comply with the provisions of r.17(2), and the prescribed format stipulated in Form 5 of the EC Rules.

D.　THE RESPONDENT’S GROUNDS OF OPPOSITION

D.1　In the Answer

18.  According to Mr Cheng, both the Answer and the Proposed Answer were drafted by a friend of his stated to be in the legal field. Yet, the lengths of these two pleadings vastly differ. Before considering the proposed grounds in the Proposed Answer, I should first examine the Respondent’s grounds of opposition in the Answer.

19.  The material grounds, in my view, are stated in para [2] of the Answer. The Respondent, apart from only admitting the Accident, denies liability by firstly denying that the Applicant was its employee, and that he was allegedly an independent contractor, and secondly denying that the Accident arose out of and in the course of employment.

20.  Additionally, the Respondent also denies (at para [4(b)]) the Applicant’s entitlement to any periodical payments or an extension of periodical payments. Next in para [10], the Respondent further averred that a payment in a sum of $58,400 the Respondent had made to the Applicant was an ex gratia payment, and that the Respondent seeks to set off this payment against the Applicant’s claim.

21.  Apart from para [1], the introduction paragraph, and paras [2], [4] and [10] that I have outlined in the preceding paragraphs, the rest of the Answer, which will be discussed in greater detail in Section G.2 below, is, in my view, immaterial and falls foul of r.17(2) of the EC Rules.

D.2　In the Proposed Answer

22.  The 24-page long Proposed Answer evidently has vastly expanded the much slimmer Answer consisting of not more than 4 pages. The Respondent has now added 18 new paragraphs (the new paras [3A] to [3R]) to the Answer.  Within the exceedingly long new paragraphs are a large number of subparagraphs, which in turn contain further subparagraphs.   As a result, these bulky amendments make the Proposed Answer extremely difficult to understand. Worse still, they blur the actual grounds the Respondent wishes to additionally rely on.  

23.  Since the Respondent is acting in person, this court needs to carefully sift through the 18 new paragraphs of the proposed amendments in order to understand the grounds the Respondent wishes to add. It was only after a repeated reading of the Proposed Answer that this court was able to identify from the labyrinth of the very convoluted drafting four new alternative grounds of opposition:

(1) The alleged injury to the Applicant is attributable to the Applicant’s “serious and wilful misconduct” pursuant to s.5 (3) of the Ordinance – “Misconduct Ground”.

(2) The Accident arose from some peril to which the Applicant has exposed himself by his own conduct – “Added Peril Ground”.

(3) The Applicant acted in contravention of the Respondent’s express instructions – “Without Instructions Ground”.

(4) The Applicant carried out security work without a requisite permit as required by the Security and Guarding Services Ordinance, Cap.460, (“SGSO”), and should be precluded from recovery on the ground that the contract of service was illegal – “Illegality Ground”.

(5) The Applicant has grossly exaggerated his incapacity, earnings, sick leave and medical expenses – “Exaggeration Ground”.

24.  In view of the bad drafting of the proposed amendments, I need to take great care in ensuring that the grounds that I have identified above are complete.  The best way to do it will be to test the above identification against the proposed grounds that Mr Cheng orally submitted in the last hearing on 9 January upon my direction.  Four grounds were put forth, namely (1) the Applicant was not the Respondent’s employee, but worked as an independent contractor; (2) In a document relating to the Applicant’s application for government housing, the description of the Applicant’s income as “wages” is incorrect; (3) The work that the Applicant undertook was illegal for the lack of a valid permit issued by the SGSO; and (4) the court should not approve the act of illegality in exercising its discretion in favour of the  Applicant.

25.  After having examined the four grounds of opposition, I am content that I have not left out any ground that the Respondent wishes to rely on. The above Ground (1) is already pleaded in the Answer.   Ground (2) in my view cannot stand as a valid ground of opposition as it relates to the evidence of whether an employment existed. As for the last two grounds of Grounds (3) and (4), they are in fact the grounds under the Illegality Ground that I have identified above.

26.  The checking exercise having been completed, I will next in Section F below discuss each ground that I have identified in para [23] above in turn, bearing in mind the parties’ arguments to be discussed in the paragraph below and the principles and objectives outlined in Section C above.

E.　THE PARTIES’ ARGUMENTS

E.1　The Applicant’s objections

27.  Mr Fan, counsel for the Applicant, objected to the Amendment Applicant by contending that first, the Amendment Application was made late – more than one year after the Answer was filed. It was submitted that this court should not, given the fact that the proposed amendments should have been within the Respondent’s knowledge, exercise its discretion in allowing the amendments.

28.  Second, insofar as the averments about the SGSO are concerned, Mr Fan suggested that the extensive averments are a mixture of evidence and submissions, which should either be later stated in the Respondent’s witness statement or by submissions at trial.

29.  Lastly, the illegality issue is an entirely new ground. Hence, the Respondent, Mr Fan submitted, needs to show good reasons for introducing this new ground before the court should allow the amendment in relation to this ground. In any event, it was stated that the proposed amendments in their present form are lengthy and should be re-drafted.

E.2　The Respondent’s submissions

30.  In support of his arguments, Mr Cheng had in an earlier hearing submitted to the court a bundle of authorities containing 55 cases.  As Mr Cheng was not able to identify the relevancy of these voluminous cases, this court directed him to identify the passages in the authorities he wished to rely on, and their relevance. At the last hearing, Mr Cheng at the end only referred to  3 cases (No. 54 to 56 of the list of authorities) [9] from the list of authorities, and highlighted the passages he was relying on as part of his submissions.

E.3　The court’s view

31.  The Amendment Application was indeed made quite late in the proceedings. However, according to the principles that I have stated above, lateness itself should not be a bar to the application if the amendments are “for the purpose of determining the real question in controversy” or of correcting any defect or error in these proceedings.  In this application, since there is no explanation for the delay in the making of the Amendment Application, I should therefore only exercise the discretion favourably if the proposed amendments are shown to be valid and sound.

32.  As for Mr Fan’s other objections on merits, I will deal with his objections when I consider the proposed amendments below.

33.  For completeness, I should also mention the authorities that Mr Cheng had referred to at the last hearing. In my judgment, they do not assist Mr Cheng as none of these cases is relevant to the Amendment Application - two of the cases concern personal injuries proceedings (Thomsen and Lee Chun Fat) and the other one is about the grant of an injunction in connection with a building management disputes (Ever True). 

F.　ARE THE PROPOSED AMENDMENTS VALID AND SOUND

F.1　Misconduct Ground

34.  The amendments concerning or touching on this ground are stated in paras [3B] and [3D].  The alleged misconduct is particularized in para [3B]. As for para [3D], the Respondent specifically relies on the available statutory ground of opposition provided in s.5(3)[10] of the Ordinance. 

35.  Despite the rather excessive detailed particulars in para [3B], I consider that these are not vague allegations, I should allow them except subs (17) and (18)[11]. These two subparagraphs add nothing but are mere repetitions of the allegations already contained in the preceding subparagraphs in para [3B].  Hence these two subparagraphs should be left out from the proposed amendments.

36.  A specific plea for the reliance on s.5(3) in para [3D] will define the controversy regarding the alleged misconduct of the Applicant, and it should therefore be allowed.  Nonetheless, having regard to the requirements of r.17(2) of the EC Rules, I am of the view that the contents of subparas [(1)] and [(3)] are mere repetitions of  subpara [(2)] [12] . I do not consider it necessary to have these extra subparagraphs making the same averment. Hence, I’d be disinclined to disallow the amendments in relation to subparas [(1)] and [(3)] of para [3D].

F.2　Added Peril Ground

37.  Paragraph [3C] is entirely devoted to a so-called “added peril” defence. It is alleged that the Applicant “has exposed himself by his own conduct and which he was not obliged to encounter by any term of his contract of service or alternatively arises out of a risk which is not incidental to the employment due to the conduct of the applicant himself or further alternatively arises out of a peril voluntarily super-induced on what arose out of his employment, to which the applicant was neither required not had the authority to expose himself or further alternatively the risk taken by the Applicant was not incidental to his employment but was due to his own voluntary conduct”.   Having regard to the fact that the “added period” defence is not specifically provided for in the Ordinance and further that the Respondent has failed to state any material averments of a peril that the Applicant had allegedly voluntarily induced in support of the alleged defence, I am of the view that the Respondent has failed to demonstrate any valid ground of opposition in relation to this ground. It should not be allowed.  Thus, the proposed amended para [3C] is refused.   

F.3　Without Instructions Ground

38.  In Section F.1 above, I have already referred to para [3B], which contains the particulars of the Applicant’s misconduct. Among the various allegations of misconduct, the Respondent seems to be also separately relying on a ground in para [3B] [(6)] in averring that the Accident did not arise out of and in the course of the employment by the Applicant having allegedly acted in contravention of the express instructions of the Respondent. In making good this ground, the Respondent further relies on para [3B] [16] which avers that when the Applicant met the Accident, he “was acting outside the scope, purview and/or sphere of his employment” for the reason that the work the Applicant was doing was not carried out for the purposes of and in connection with the Respondent’s trade or business but was for his how pleasure, amusement, excitement and/or enjoyment and/or out of own playfulness.

39.  Under s.5(4)(b) of the Ordinance, the deeming provision in respect of any unauthorized act of an injured employee will only be engaged if it is done by the employee “for the purposes of and in connection with his employer’s trade or business”.  Thus, it would be open to the Respondent to raise as a separate ground by averring that the Applicant’s alleged unauthorized act was not for the purposes of and in connection with the Respondent’s trade or business. As I have already granted leave in relation to para [3B], no separate order is needed.

F.4　Illegality Ground

40.  A large chunk of the proposed amendments is about the Illegality Ground, which is set out in paras [3F] to [3Q] covering a space of 29 pages.

41.  Under s.2(2) of the Ordinance, the court may allow an injured employee to recover compensation under an illegal contract of service if it thinks proper “having regard to the circumstances of the case”.  The Respondent now wishes in the new proposed paras [3F] to [3Q] to aver that the work the Respondent did was security work pursuant to SGSO and it was illegal for want of a valid permit issued by SGSO.

42.  In his objections, Mr Fan did not seek to argue that this ground was not valid. He was only objecting on the ground that that it was a newly raised issue.

43.  In bearing in mind that the principles stated above, I consider that for the purpose of doing justice to the parties, the amendments on the Illegality Ground, provided they are succinct and concise, should be allowed. 

44.  The new proposed paragraphs for the Illegality Ground are exceedingly long, and they should, as Mr Fan has also pointed out, in any event, be re-drafted. However, I do not think that such option is practical for it would undoubtedly further delay the proceedings.  Hence, taking a pragmatic approach, I will reluctantly grant leave to the Respondent in respect of the following paragraphs:

[3G] – which introduces the SGSO and the responsible institution for the issuance of the relevant permit.

[3H] – which is concerned with the averment that the Applicant’s work is subject to the regulations of the SGSO.

[3I] – which is about the restriction imposed by SGSO.

45.  I consider however subparas [3] [4] and [5] are not relevant. In these subparagraphs, the Respondent set out in excessive details about the restrictions imposed by SGSO on obtaining the benefit of security work, the punishable offences for the contravention of the relevant provisions of the SGSO as well as and the functions of the relevant Authority, which matters are not relevant to the matter of controversy. They should be disallowed.

46.  Hence, I will only grant leave in respect of subparas [1] and [2].

[3L] – which concerns the allegation that the work the Applicant undertook was illegal for the want of a valid permit.

47.  I however do not consider the averment that the Respondent obtained a permit after the Accident in the last phrase of subpara [(3)] relevant. Hence, I order this part (“but has since then applied for a Category D type of permit and was issued such a type of permit by the Commissioner on 25 January 2017”) be deleted from subpara [(3)].

48.  Further, I also direct the whole of subpara [(4)] be deleted as its entirety concerning the nature of the premises in which the Accident happened is not relevant.

[3N] – which is about the plea that the court should not exercise its discretion under s.2(2) of the Ordinance in favour of the Applicant.

49.  The rest of the amendments for the Illegality Ground will be declined as follows:

50.  Paragraph [3J].  The averment as to the stringent requirements for the obtaining of a permit under the SGSO is not relevant to the ground of illegality. It can be advanced by way of submissions but not as a ground of opposition.

51.  Paragraph [3K].  It is not necessary to set out all the four categories of the Security Personnel Permits.  After disallowing this entire paragraph, I should, for the sake of completeness and clarity, add an amendment to subpara [(1)] of para [3L] by adding at the end a new sentence: “Category D type permit is for installation, maintenance and/or repairing of a security device”.

52.  Paragraph [3M].  In this paragraph, the Respondent set out a gazette notice issued by the Authority concerning the installation, maintenance and/or repairing of a security device in relation to the conditions for the issuance of the permit.  It concerns evidence and should not be allowed.

53.  To summarize, under this ground, I allow amendments stated in paras [3G], [3H], [3I] [(1)] and [(2)], [3L] [(1)] [ (2)], [(3)] as amended in accordance with para [47] above and [3L] [(5)] and [3N].

54.  These amendments are refused: para [3I] [(3)] [(4)] [(5)], [3J] [3K], [3L] [(4)], [3M], [3O], [3P] and [3Q].

F.5　Exaggeration Ground

55.  The alleged exaggeration of the Applicant’s claim I believe should be found in paras [3E] and [3R]. Notwithstanding that the allegations in both of these proposed new paragraphs are slightly different, they are nonetheless also about the Respondent’s dispute of the Applicant’s extent of incapacity, sick leave, earnings and medical expenses.

56.  According to the undisputed facts, the Labour Department had conducted a medical assessment on the Applicant. In a certificate of review (Form 9), both the Applicant’s sick leave (stated to be from 3 April to 20 November 2014) and the percentage loss of earning capacity were assessed. As neither party has filed any appeal against the assessment, the medical board’s assessment stated in Form 9 on sick leave and the percentage loss of earning capacity will be binding on the parties.  Hence, there should be no controversy regarding the Applicant’ extent of incapacity and sick leave. The Respondent should be not allowed to plead to such matters.

57.  The opposition to wages and medical expenses are matters of evidence, and should not be pleaded.

58.  Hence, I am disinclined to allow any amendments in relation to the Exaggeration Ground. Paragraphs [3E] and [3R] will be disallowed.

G.　OTHER OFFENDING FEATURES

G.1　The Proposed Answer

59.  Having regard to the requirements of r.17 (2) of the EC Rules that an answer should be by way of concise statements, I will further disallow the proposed amendments in paras [3A][13] and [3F][14].  These paragraphs are repetitions of the Respondent’s already pleaded denial of the existence of an employment.  They do not add any meaningful averments, and should hence be disallowed.

G.2　In the Answer

60.  It is observed that the Answer contains two types of traverse commonly appearing in a defence served in a civil matter. They are these:

“Each and every allegation contained in [x] paragraph is not admitted and the applicant is put to strict proof thereof”: paras [2] [(2)], [5] [(a)] [(b)] [(d)(i)], [(e)] [(f)], [6], [(7)] [(a)] [(b)], [(8)] [(a)] [(b)], [9] [(a)] and [11].

“Without prejudice to the generality of the foregoing…”: paras [2(b)], [3] [(b)] and [5] [(d)(ii)].

61.  According to the statutory objectives and r.17(2) of the EC Rules, outlined in Section C.2 above, I consider such format of pleading in an answer to be in contravention of the requirements of r.17(2) and should be edited out.

62.  Further, quite apart from the contravention of r.17(2), I further consider the following passages to be immaterial and not in line with r.17(2): -

(1) Paragraph [3].  Paragraph [2] has stated the ground that the Applicant was not the Respondent’s employee. Stating in this paragraph that the Respondent was not the Applicant’s direct employer is repetitious, and falls foul of the requirement of being concise and succinct.  However, for the sake of facilitating easy reading, I will allow subpara[b] to remain as it contains the abbreviation of the Ordinance.

(2) Paragraphs [5], [6], [7], [8], [9] and [11]. In these paragraphs, the Respondent seeks to traverse each and every single particular of averments stated in the Application. I am of the firm view that such excessive details are out of step with the r.17(2) requirements.

(3) Paragraph [12].  This contains nothing but only a general traverse[15] that usually appears in a defence to a civil claim. It clearly offends the r.17(2) requirements.

63.  Having regard to the statutory objectives and the letter and spirt of the EC Rules mandating for procedural simplicity, I’m inclined to exercise the court’s power on my own motion by making an order that those irrelevant and offending parts of the Answer discussed in the preceding paragraph be struck out. 

64.  It is therefore ordered that paras [3] [(a)] [(c)], [5], [6], [7], [8], [9], [11] and [12] be struck out from the Answer.

H.　CONCLUSION

65.  To conclude, I order that the Answer should be amended in accordance with the directions that I have made above.  To assist the Respondent, I am attaching a fair copy of the amended answer that the Respondent is allowed to file.  The amendments that this court have allowed or made are underlined in black.

I.　COSTS OF THE AMENDMENT

66.  The starting point for an application for leave to amend is for the applying party to pay in any event all the costs of and occasioned by the amendment.  In this case, the application was opposed, and the Respondent has only succeeded in obtaining leave in relation to a portion of the proposed amendments. I should therefore make two sets of costs: namely, the costs of and occasioned by the amendment as well as the costs of the hearing.

67.  As for the costs of and occasioned by the amendment, I order the Respondent to pay the Applicant's costs in any event.

68.  As for the costs of hearing, the Applicant cannot be regarded as having completely succeeded in opposing the Amendment Application. Hence, I do not consider it fair to award the entire costs of the hearing to the Applicant. An apportionment is needed. Having regard to the numerous irrelevant materials contained in the proposed amendments as well as the Respondent irrelevant long list of authorities resulting to a lot of wasted costs, I will take a broad brush approach by fixing the Respondent’s costs liability at 50 percent, and the remaining costs be costs in the cause.

69.  As for the costs in relation to the cost’s exercise of its own motion to strike out a part of the Answer, I consider that a fair order should be costs in the cause.

J.　DISPOSITION

70.  For the Amendment Application (including the July Summons), it is ordered that:

(1) The Respondent shall within 14 days of the handing down of this Decision file with this court and serve on the Applicant a copy of the amended answer as per the draft format attached to this Decision. Before effecting the filing and serving as ordered, the Respondent shall make corresponding changes to the paragraph numbering of the attached draft amended answer.

(2) The Respondent do pay the Applicant the costs of and occasioned by the Amendment Application (including the July Summons) including costs reserved, to be taxed if not agreed.

(3) The Respondent shall pay the Applicant 50 percent of the costs of the hearing of the Amendment Application (including the July Summons) including costs reserved with certificate for counsel, to be taxed if not agreed.

(4) Fifty percent of the costs of the hearing of the Amendment Application (including the July Summons) be costs in the cause, including costs reserved, with certificate for counsel.

(5) The costs in relation to the court’s striking out order be costs in the cause.

(6) The applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

(7) The above costs order is made on a nisi basis. Any application to vary this costs order nisi should be made by summons within 28 days of the handing down of this Decision, and be heard at the directions hearing now fixed on 18 April 2018 at 10:00 am at Court no. 26 of the District Court.  If no such application is made, the costs order nisi stands absolute.

71.  Lastly, the Respondent should be reminded of the order made in the Time Summons stated in para [6] above that the Respondent is required to file and serve the witness statement within 42 days of the handing down of this Decision, which will be 29 March 2018.

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