TO SHING CHAU v. HUNG WAI BUILDING CONSTRUCTION AND ENGINEERING LTD AND ANOTHER

DCEC 491/2023

[2025] HKDC 480

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 491 OF 2023

--------------------------

IN THE MATTER OF AN APPLICATION BETWEEN

-------------------------

--------------------------

DECISION

--------------------------

The Summons

1.  The Applicant (“A”) claims in this employees’ compensation action (“EC Action”) against his employer as the 1^st Respondent and the principal contractor as the 2^nd Respondent (“R1” and “R2” respectively, and collectively “Rs”) for compensation under the Employees’ Compensation Ordinance (Cap 282) (“ECO”) in respect of an injury at work accident he met on 24 September 2022 (“Accident”).

2.  A commenced the EC Action on 1 March 2023. Rs made a sanctioned payment on 30 August 2023 in the sum of $131,500 (on top of advance payments totalling $88,391.60) (“EC Sanctioned Payment”) in accordance with O 22 r 3 of the Rules of the District Court (Cap 336H) (“RDC”). The payment was not accepted.

3.  By a summons filed on 15 October 2024 (“Summons”), A seeks:

(i) Leave to A to accept the EC Sanctioned Payment out of time; and

(ii) Costs of the EC Action, including the costs of and incidental to the Summons, be paid by Rs to A, to be taxed if not agreed.

4.  Rs agree for A to accept the EC Sanctioned Payment out of time, but oppose the proposed costs order. Whilst agreeing that Rs shall pay A’s costs of the action up to 27 September 2023, i.e. expiry of the 28-day prescribed period within which A could have accepted the EC Sanctioned Payment without leave (“Expiry Date”), Rs argue that A should pay Rs’ costs, on an indemnity basis, of the EC Action incurred thereafter.

5.  The only outstanding issue before this Court is thus costs liability of the EC Action after the Expiry Date of 27 September 2023.

6.  In support of the Summons, A filed an Affirmation of Yip Kam Shi on the date of the Summons. Rs filed an Affirmation of Ho Ka Ho in opposition on 30 October 2024 and A filed an Affirmation in reply on 6 November 2024.

7.  This Court has read the affirmations filed by the parties and considered the written submissions of A’s counsel Mr Ronald Pang instructed by Messrs KCL & Partners, and those of Rs’ solicitors Messrs Deacons.

Background/ Procedural History

8.  After the EC Action commenced on 1 March 2023, and non-acceptance by A of the EC Sanctioned Payment made on 30 August 2023, a related common law action DCPI 2059 of 2024 (“PI Action”) arising out of the Accident and involving the same parties, with A as the Plaintiff and R1 and R2 as the 1^st and 2^nd Defendants respectively, was commenced on 3 July 2024.

9.  On 20 August 2024, the Defendants made a sanctioned payment in the PI Action in the sum of $200,000 (“PI Sanctioned Payment”), which expressly states to have taken into account the EC Sanctioned Payment and advance payments. The total sum on offer was thus $419,891.60 ($200,000 + $131,500 + $88,391.60).

10.  On 27 August 2024, A, as the Plaintiff in the PI Action, accepted the PI Sanctioned Payment.

11.  There is no question that acceptance of the PI Sanctioned Payment would extinguish the EC claim, and in effect result in a global settlement of both actions.

12.  There is also no question that the Defendants should, and they have agreed to, pay the Plaintiff’s costs of the PI Action up to the date of acceptance of the PI Sanctioned Payment in accordance with O 22 r 20(1) of the RDC, but parties cannot agree on costs of the EC Action incurred after the Expiry Date.

13.  A chronology of the events relevant to the court’s consideration of the Summons is set out as follows:

Date	Event
24.9.2022	Accident
1.3.2023	EC Action commenced
19.6.2023	Expiry of A’s sick leaves
30.8.2023	EC Sanctioned Payment
22.9.2023	Issue of Form 7
27.9.2023	Expiry Date
3.7.2024	PI Action commenced
20.8.2024	PI Sanctioned Payment
27.8.2024	Acceptance of PI Sanctioned Payment
15.10.2024	A filed the Summons

14.  Of note is that A commenced the EC Action only some 5 months after the Accident when he was still on sick leave and Medical Assessment Board (“MAB”) assessment for the purposes of the ECO had yet to be arranged.

15.  A argues, inter alia, on justification for him not to accept the EC Sanctioned Payment at the time when it was made on 30 August 2023 as he was then not in a position to realistically assess acceptability of the same before issue of Form 7.

16.  I will get back to this in my analysis below.

The PI Sanctioned Payment

17.  It is specifically stated in the PI Sanctioned Payment Notice filed on 20 August 2024 the following:

“It is part of the terms of a sanctioned offer set out in the Sanctioned Offer letter from the 1^st and 2^nd Defendants’ solicitors to the Plaintiff’s solicitors of even date. If you give notice of acceptance of this sanctioned payment, you will be treated as also accepting the sanctioned offer.”

[emphasis added]

18.  In a letter also dated 20 August 2024 from Messrs Deacons to Messrs KCL & Partners marked “SANCTIONED OFFER” and “WITHOUT PREJUDICE SAVE AS TO COSTS” (“Sanctioned Offer Letter”) under caption of the PI Action, it is stated that:

“… we put on record that your client shall pay our clients’ DCEC costs incurred after expiry of our said EC Sanctioned Payment on an indemnity basis. Our effecting of (PI) Sanctioned Payment/ Sanctioned Offer herein shall not be deemed as waiver of our clients’ rights to seek DCEC costs from your client”.

19.  A disagreed and the parties exchanged “without prejudice” correspondence since 22 August 2024 arguing on post-Expiry Date costs of the EC Action, and whether the EC Action should proceed to trial when they could not agree on costs.

20.  Notwithstanding the arguments of Messrs KCL & Partners in their letter dated 22 August 2024 to Messrs Deacons that the PI Sanctioned Payment, incorporated with the costs conditions stated the Sanctioned Offer Letter, is defective, the Plaintiff filed on 27 August 2024 a Notice of Acceptance of the PI Sanctioned Payment whereby the PI Action was settled and concluded.

A’s Arguments

21.  A’s arguments can be summarised as follows:

(1) The PI Sanctioned Payment made on 20 August 2024, specifically made and stated to be encompassing the EC Sanctioned Payment of $131,500, supersedes the EC Sanctioned Payment made on 30 August 2023.

(2) Upon the PI Sanctioned Payment made on 20 August 2024 which specifically encompasses the EC Sanctioned Payment, acceptance of the EC Sanctioned Payment is implicit from the acceptance of the PI Sanctioned Payment. The prescribed time limit for acceptance without leave of the court, being 28 days from 20 August 2024, had therefore not expired until 17 September 2024. There is thus in fact no question of lateness for acceptance on 27 August 2024. It is therefore unnecessary for A to seek leave to accept the EC Sanctioned Payment out of time.

(3) The EC Sanctioned Payment was offered afresh as part of and in global settlement with the PI Action, the acceptance of which would have the effect of extinguishing A’s claim in the EC Action. There must be an implied term allowing A to accept the EC Sanctioned Payment as part of the PI Sanctioned Payment, with no liability for costs pursuant to and in the spirits of the O 22 regime. By making the PI Sanctioned Payment (encompassing the EC Sanctioned Payment) available for acceptance, it is implicit or there is an implied term that Rs agreed to re-open the EC Sanctioned Payment with costs of the EC Action to A;

(4) This implied term is a special circumstance that renders it unjust in the circumstances for the usual costs consequences to be imposed against A upon the premise that A has failed to recover compensation beyond the EC Sanctioned Payment, but has elected to accept it out of time as argued by Rs.

22.  A’s counsel in his written submissions refers to the proposition adopted from the English Court of Appeal judgment of SG v Hewitt [2012] 5 Costs LR 937 (at §§20, 76) in the holding of the Hong Kong Court of Appeal judgment of Or Siu Lung v Fu Hong Home for the Elderly Co Ltd [2018] 1 HKLRD 872 and emphasises that under O 22 r 23 of the RDC, “injustice should be the benchmark based on ‘what the fairness of the situation demands’, rather than ‘exceptional circumstances’ which suggest that only extreme circumstances would count”.

Rs’ Arguments

23.  Rs’ arguments are summarised as follows:

(1) By accepting the PI Sanctioned Payment specifically incorporating /built in with the Sanctioned Offer Letter, A has agreed to the terms of the Sanctioned Offer Letter, ie to pay Rs’ costs of the EC Action incurred after the Expiry Date of the EC Sanctioned Payment.

(2) The proposed implied term of Rs agreeing to pay A’s costs of the EC Action up to acceptance as argued by A is contradicted by the express terms set out in the Sanctioned Offer Letter requiring A to pay costs of the EC Action after the Expiry Date. There is no legal basis to be implied such terms on costs which are clearly not the parties’ agreement.

(3) The appropriate approach/ default position is that where an applicant has failed to accept a sanctioned payment until after expiry of the deadline, he will be considered the unsuccessful party and should normally, unless there are special circumstances, pay the post-deadline costs: Wong Ching Wan v A S Watson & Co Ltd [2007] 4 HKLRD 362 at §§33-37.

(4) It was unreasonable for A to raise and pursue that he would have obtained employees’ compensation higher than the EC Sanctioned Payment, or that he was justified in not accepting the EC Sanctioned Payment within the deadline.

(5) Discretion on costs should be exercised against A for his unreasonable litigation conduct including (i) premature commencement of the EC Action; (ii) premature appeal of Form 7 even before it was issued; and (iii) protracted discovery rendering settlement difficult.

(6) Discretion on costs should be exercised in favour of Rs who have made bone fide attempts all along to settle by making prompt sanctioned payments in both actions.

The Law/ Legal Principles

24.  O 22 r 23 of the RDC stipulates that where a plaintiff fails to obtain a judgment better than the sanctioned payment or fails to obtain a judgment that is more advantageous than a defendant’s sanctioned offer, the court may, inter alia, order the plaintiff to pay any costs incurred by the defendant after the latest date on which the payment or offer could have been accepted without requiring leave of the court unless the court considers it unjust to do so having regard to all the circumstances.

25.  In the present case, A has not obtained a judgment but elects to accept the EC Sanctioned Payment out of time, of a sum not more advantageous than that made by Rs a year ago.

26.  The costs sanctions stipulated under O 22 r 23 are in my view not automatically applicable.

27.  The court has full discretion as to costs pursuant to section 53(1) of the District Court Ordinance (Cap 336) (“DCO”).

28.  Also as provided under O 62 r 5 of the RDC, the court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account, inter alia, the underlying objectives set out in O 1A r 1 and the conduct of all the parties, and be guided by O 62 r 2.

29.  Where there are parallel claims of employees’ compensation and common law personal injuries actions arising out of the same accident, and the respondent/defendant makes sanctioned payments in both actions, the court would have regard to both sanctioned payments in the exercise of its discretion as to costs.

30.  It was held in Andrew William Maxwell v Keliston Marine (Far East) Ltd [2012] 2 HKC 249 that it was right and necessary for the defendant therein to make a previous payment into court in the employees’ compensation proceedings, and for the Court to have regard to both employees’ compensation sanctioned payment and common law sanctioned payment in the exercise of its discretion as to costs. The policy is undoubtedly to enhance settlement with proper use of the mechanism provided under the O 22 r 23 regime. The learned Bharwaney J held at §37 that:-

“A defendant faced with a similar situation today and who wishes to protect himself on costs would be well advised either to make a “nominal” sanctioned payment in the employees' compensation proceedings and a “full” sanctioned payment in the common law proceedings or to split the total payment-in between the two proceedings, as was done in the present case, and, in either case, to make an additional sanctioned offer in both proceedings that the plaintiff/applicant is invited to accept both payments in full and final satisfaction of the employees’ compensation and common law claims.”

[emphasis added]

31.  As also observed by the learned judge, by referring to the judgment of HHJ Marlene Ng (as she then was) in Miah Mohammed Tara v Hyundai-CCECC Joint Venture (DCEC 1068/2005, 22 May 2006) at §22:-

“HH Judge Marlene Ng was right to observe, in Miah Mohammed Tara v Hyundai-CCECC Joint Venture, that, by not making a payment into court in the employees’ compensation proceedings, the defendants “will be in an unenviable position of being without protection on costs afforded by rule 20 of the Employees' Compensation Rules and Order 22 of the Rules of the District Court should the applicant demand costs of the employees’ compensation action following the acceptance of the payment into court in the personal injury action and the withdrawal of the employees' compensation action.”

[emphasis added]

32.  I have derived great assistance from the principles distilled from the authorities relied on by Rs in the judgments both of HHJ Marlene Ng (as she then was) in Wong Ching Wan (supra) and Miah Mohammed Tara (supra), followed in Lau Po Ling v Josef Gartner & Co. (HK) Ltd & Anor (DCEC 976/2014, HHJ Levy, 17 March 2015), as follows:

(1) The starting point is that a party who fails to accept a sanctioned payment until after expiry of time limit for accepting such a payment without leave is deemed to be the unsuccessful party. Subject to section 53 of the DCO and O 62 rr 2(4) and 3(2) of the RDC, costs should usually follow the “event”, ie the usual costs order is for the claimant to pay the paid-in party’s costs after expiration of the prescribed period unless there are special circumstances that render it unjust to make the usual order;

(2) The burden of demonstrating “special circumstances” justifying departure from the usual costs order lies on the unsuccessful party, ie the claimant who accepts the sanctioned payment out of time;

(3) Where no “special circumstances” are demonstrated, to grant costs in favour of the claimant would cause grave hardship and would blunt the overriding objective of the payment-in scheme under O 22 of the RDC to prevent further costs and to dispose of legal proceedings;

(4) The court’s discretion should be exercised in furtherance of the overriding objective of justice and fairness as provided under O 62 r 2(4) of the RDC;

(5) A crucial test would be whether the claimant was justified in not accepting the sanctioned payment within the prescribed time and whether his belief, if any, of entitlement to compensation higher than that paid in was reasonable; and

(6) The waiting by the claimant for further or hopefully more favourable evidence to put him in a better position to consider acceptability of the sanctioned payment does not constitute a special circumstance.

33.  In Miah Mohammed Tara (supra), costs arguments arose in circumstances similar to those of the present case: The employer made a payment into court in the EC case of $60,000 and subsequent payments into court in the common law action totalling $182,000. The injured employee accepted the total sum offered of $242,000.00 in global settlement of both the EC and common law actions, and parties subsequently agreed to settle both actions, subject to the determination of the issue of costs in the EC case. It was held on the strength of the consent order filed pursuant to the global settlement that there was an agreed amount of $60,000 for the amount of employees’ compensation. In light of the claimant’s argument that the EC claim should worth more than the payment-in of $60,000 but had been compromised by the overall settlement of both actions, the court further considered and exercised her discretion on costs by assessing whether there was a good chance that the claimant would be able to achieve an EC claim beyond $60,000 on the materials available at the time when the payment-in was made. The court concluded upon the evidence that the claimant had not demonstrated a good chance that the EC claim would worth beyond $60,000. There was a delay on the part of the applicant to find out the merits of his claim without any fault of the respondent who in the meantime sought to protect his costs position by making a payment into court. The applicant would have to bear the normal adverse costs consequences in respect of costs after expiry of the payment-in, despite the subsequent global settlement or subsequent payments into court in the corresponding common law action. The court ordered the applicant to pay the respondent’s costs after the EC payment-in.

34.  I accept Rs’ submissions that although Wong Ching Wan (supra) and Miah Mohammed Tara (supra) are judgments on the old payment-in regime, the sound reasoning and principles on the exercise of judicial discretion, aiming at enhancing settlement and preventing further unjustifiable costs, should hold good and continue to apply under the new sanctioned payment regime and in the present case.

35.  The above stated principles are endorsed and authoritatively stated in the Court of Appeal judgment of Or Siu Lung (supra) per Hon Lam VP (as the PJ then was) cited by A’s counsel, relied on as highlighting flexibility in the court’s exercise of discretion on costs, as follows:

“21. …It is therefore normally consistent with such purpose that, having rejected a sanctioned payment, a party who fails to achieve a better outcome should pay for the costs incurred after the sanctioned payment. However, there are situations where such rationale is not applicable and the imposition of the normal costs consequences may become unjust. Flexibility is therefore built into the regime under r 23(5) and (6)…”

36.  In that case, the plaintiff, having rejected the sanctioned payment within time, died of unrelated causes. Subsequently the plaintiff’s estate took over the proceedings and obtained leave to accept the sanctioned payment out of time. The defendant sought costs incurred after expiry of the sanctioned payment against the estate of the plaintiff. The Court of Appeal accepted as a starting point (under the holding) that it shall make such order unless it considered unjust to do so in all the circumstances of the case under O 22 r 23(3), (5) and (6).

37.  The Court of Appeal cited at §17 the propositions derived from the judgment of Black LJ (as she then was) in SG v Hewitt (supra) and emphasised that “injustice” should be the benchmark, which is highly fact-sensitive thus flexibility should be allowed. The court should also guard against citation of authorities to follow decisions on facts as if they were precedents.

38.  More importantly, the court, as stated in §§21, 24 and 25, should bear in mind the underlying objectives of enhancing time and costs economical litigation under the Civil Justice Reform and,

“21. …must have regard to the underlying purpose for the sanctioned payment regime in O 22 …to encourage settlement and to discourage unnecessary litigation. It is therefore normally consistent with such purpose that, having rejected a sanctioned payment, a party who fails to achieve a better outcome should pay for the costs incurred after the sanctioned payment…”

24. …a party may change his mind not because of new information calling for reassessment of risk. It may due to a change in the person in charge of a corporate plaintiff. It may due to change of legal advisor who takes a different view of the case. Plainly, change of mind in such circumstances could not normally, without more, be a ground for the disapplication of the normal costs rule...

25. …reassessment of risk arising from change of circumstances can be manifold. Unavailability of a material witness, the change in the law brought about by new authorities from a higher court, unfavourable opinion in an expert report are some such examples. All these could be unforeseen by a plaintiff but, consistent with the spirit of the sanctioned offer regime, it is unlikely that any of these contingencies in litigation can constitute injustice in the application of the normal costs rule...”

[emphasis added]

39.  The above demonstrates the high threshold of the “unjust” or “special circumstances” benchmark which the party seeking to depart from the normal costs should follow the event order, has to show.

40.  A in the present case has the burden of showing the “special circumstances” and why it would be unjust to require him to pay Rs’ post-Expiry Date costs of the EC Action, or looking at it from another perspective, to deprive Rs of the costs under the usual costs order, when A has failed to achieve a better outcome and elects to accept the EC Sanctioned Payment out of time.

Analysis

41.  A argues in gist that it would be “unjust” for the Court to order costs sanctions against him in the special circumstances of this case, ie he was obliged to accept the same amount of the EC Sanctioned Payment because it was encompassed in the PI Sanctioned Payment in global settlement of both actions. This would allow Rs to cherry-pick for a settlement of the PI Action and at the same time penalise A for costs of the EC Action. A should be allowed to accept the PI Sanctioned Payment when it was made available with no strings of costs sanctions tied in both actions.

42.  I have considered the parties’ arguments and submissions in light of the abovecited principles and authorities, and deal with them under the following headings:

(1) Has A agreed, upon accepting the PI Sanctioned Payment, to pay Rs’ costs after expiry of the EC Sanctioned Payment?

43.  Rs argue that by accepting the PI Sanctioned Payment, built in with the Sanctioned Offer Letter of even date, A should be taken to have agreed to accept the entire offer put forward and to pay Rs’ costs incurred after expiry of the EC Sanctioned Payment in the EC Action as stated in the Sanctioned Offer Letter.

44.  The simple answer to this argument is that there was no agreement by A as alleged: A raised strong objections by a letter dated 22 August 2024 to the proposed unfavourable post-sanctioned payment costs order in the EC Action set out in the Sanctioned Offer Letter. No agreement could be reached despite A’s filing of the Notice of Acceptance of the PI Sanctioned Payment on 27 August 2024.

45.  The ensuing arguments by exchange of further correspondences between the parties have resulted in a joint letter dated 4 September 2024 (“Joint Letter”) from the parties to the court. The Joint Letter sets out the parties’ arguments and lengthy submissions, enclosing exchange of correspondences and seeking a ruling of the court. Without any direction from the court, A and Rs sent further letters to the court dated 2 and 3 October 2024 respectively containing further submissions on the subject, citing authorities as well, purportedly for the purposes of the directions hearing fixed on 4 October 2024.

46.  There was no way the court could deal with the substantive arguments in a directions hearing. This Court gave directions on 3 October 2024 (i) for the parties to take out a proper application by way of summons supported by affirmations (if necessary), followed by written submissions; (ii) for the application to be dealt with by way of paper disposal; and (iii) for vacation of the directions hearing, hence the Summons filed on 15 October 2024.

47.  Pausing here, legal practitioners are urged to heed and follow the important guidelines on proper procedural discipline and practice laid down by Hon Lam VP (as the PJ then was) in the Reasons for Judgment in AXA China Region Insurance Company Limited v Leong Fong Cheng CACV 113/2016 on 28 October 2016 (paras 50-55).

48.  It is frustrating to note that some legal practitioners persistently flout the guidelines, like the parties’ solicitors in this case, despite repeated reminders from the court.

49.  Judges cannot be expected to read correspondence and rule, act on or deal with arguments without proper applications. There is no reason why those making requests or applications by correspondence should be allowed to jump the queue when others who follow the proper procedures (by filing a summons and affidavits and submissions according to the directions from the court) have to be deferred.

50.  Save and except for purely administrative or clerical matters which need not involve the exercise of any judicial power, the court generally will not take heed of applications, requests or assertions advanced in correspondence. Applications should properly be made by way of summons, supported by affidavits. A party cannot expect the judge to read (or reply to) his or her letter unless it is a letter written pursuant to directions or leave granted by the judge. The situation is made worse by the parties’ enclosing lengthy exchange of correspondences “by way of background” to found their disagreements/ arguments.

51.  Such indulgent practice demonstrating a lack of proper procedural discipline should and would entail costs sanctions.

(2) Implied term of the PI Sanctioned Payment

52.  A argues that the PI Sanctioned Payment, encompassing the EC Sanctioned Payment, carries an implication or implied term that Rs agreed to re-open the EC Sanctioned Payment with costs to A.

53.  This argument cannot stand as the alleged implied term or intention is clearly contradicted or negated by the express terms set out in the Sanctioned Offer Letter accompanying and incorporated in the PI Sanctioned Payment Notice, in that A shall pay Rs’ costs in the EC Action incurred after expiry of the EC Sanctioned Payment.

54.  On the other hand, it is in my view correct for A to argue that the PI Sanctioned Payment is defective in that a sanctioned offer/payment made under O 22 r 23 cannot carry with it adverse costs consequence like what is contained in the PI Sanctioned Payment in the present case. (See the decision of DHCJ Yee in Wong Yim Man Anthea v Wong Ho Ming Felix [2016] 3 HKLRD 249)

55.  It begs the question and I am inclined to the view that the PI Sanctioned Payment was not a valid sanctioned payment made under O 22 r 23. However the parties did not raise any query in this regard and A (being the Plaintiff in the PI Action) has accepted it with his costs, agreed to be paid by the Defendants and covered up to the date of acceptance in the PI Action. There is thus no issue arising and I need not deal with it.

(3) Whether A had a good claim beyond the EC Sanctioned Payment

56.  This question deals with merits of A’s claim as to whether, as A puts it, he had a good claim beyond the EC Sanctioned Payment which in light of the authorities would constitute “special circumstances” justifying departure from the usual costs to follow the event order.

57.  As decided in Miah Mohammed Tara (supra) at §85, it is incumbent on A seeking for costs in these circumstances to demonstrate he has merits in brining the other party to book.

58.  I should assess the EC claim on a broad-brush basis to see whether it was reasonable for A not to accept the EC Sanctioned Payment, following the approach of and exercise conducted by the court in Or Siu Lung (supra) and Miah Mohammed Tara (supra).

59.  A’s pleaded case as set out in the Application is that he was at the time of the Accident employed to work by R1 at a daily wage of $1,500. He worked on average 23 days a month, hence monthly earnings were $34,500 ($1,500 x 23).

60.  Bank deposits records show that for the 12-month period (from 9/2021 to 8/2022) prior to the Accident, A received earnings in the total sum of $237,665, as confirmed in his Affirmation filed on 26 June 2024. This is equivalent to a much lower monthly average of about $19,805 per month ($237,665/12). Rs therefore argue that A’s monthly earnings at the time of the Accident should be no more than $20,000.

61.  Rs’ case, as stated in the witness statement of R1’s director, is that A’s daily wage was $1,000, but not $1,500. This is supported by the relevant employment contract signed between A and R1 dated 27 June 2022. Records also show that when calculating sick leave payments paid to A after the Accident for the month of 10/2022, R1 has adopted monthly earnings of $24,000 ($1,000 x 24 days) and paid A $19,200 ($24,000 x 4/5).

62.  A explains in his witness statement that the $1,000 daily wage stated in the employment contract has not included additional cash payment calculated at $500 per work day.

63.  On the other hand, A states that after commencing work for R1 on 27 June 2022 and until the date of Accident on 24 September 2022, he had only worked for R1 for a few days on a casual basis. Indeed it is shown in A’s Affirmation filed on 26 June 2024 that the bank deposits during the whole period of A’s employment of 3 months with R1 amount to a total of only $10,815.

64.  A has not adduced any evidence on earnings from other concurrent employment(s), if any, during the period of his employment with R1 other than the scanty bank deposits which he may argue to be included in calculating earnings under section 11(7) of the ECO.

65.  On the overall evidence, it is in my view highly unlikely that A’s pleaded case of $1,500 daily wage or $34,500 monthly earnings will be accepted by the court. A finding of $20,000 to no more than $25,000 would be more reasonable. Indeed a figure of $25,000, contradicted by documentary evidence of employment contract, bank deposits and sick leave payments, is in my view highly favourable to A, and would unlikely be achievable at trial.

66.  With the other undisputed matters of A’s age, medical expenses incurred as stated in A’s witness statement, sick leaves endorsed and the MAB assessments (Form 7), the EC claim would likely be within a range shown below:

	Monthly Earnings $20,000	Monthly Earnings $25,000
Section 9 Monthly earnings x 48 x 1.5%	$14,400	$18,000
Section 10 Monthly earnings x 262/30 x 4/5	$139,733	$174,667
Section 10A	$10,000	$10,000
Total EC	$164,133	$202,667
(Less) Advance payments	($88,391.60)	($88,391.60)
	$75,741	$114,275
Interest: Net EC at say 4.2%pa from date of Accident for 1 year (up to Expiry Date on 27 September 2023)	$3,181	$4,800
Net EC plus interest	$78,922	$119,075

67.  The net EC claim plus interest would therefore likely lie within a range of $79,000 to $120,000 (quantified up to the Expiry Date of the EC Sanctioned Payment).

68.  A has not demonstrated that it was reasonable for him not to accept the EC Sanctioned Payment of $131,500 within time, or that he had a good claim beyond the amount paid in.

(4) Litigation conduct

69.  Rs complain that A’s commencement of the EC Action around 5 months after the Accident, when he was still on sick leave and no MAB assessment could yet be arranged, was premature. It renders settlement negotiations difficult and parties could not engage in meaningful “without prejudice” discussion aiming for settlement or narrowing down the issues on quantum. The undesirable situation was accentuated by the protracted discovery by A of his medical reports and records relevant to the Accident.

70.  A’s sick leaves expired on 19 June 2023. MAB assessment took place on 9 September 2023 and the Certificate of Assessment/Form 7 was issued on 22 September 2023.

71.  Curiously enough, A pleads in the Application filed on 1 March 2023 an appeal against the Certificate of Assessment (before it was issued). It is on the face of it a mistake in the pleading, which Rs argue however to be reflective of the unreasonable litigation conduct of A. No explanation is given, nor submission made, by A in this regard.

72.  A submits that the issuance of the Form 7 after the date of the EC Sanctioned Payment was a “special circumstance” justifying A’s non-acceptance within time because without the Form 7, he was not in a position to properly assess whether the sum offered was reasonable or sufficient for acceptance.

73.  I agree with Rs that such complaints should more properly be made by Rs but not A. The ball is in A’s court who chose to commence the EC Action within a short time after the Accident and before expiry of the sick leaves or MAB assessment. Rs were put in a difficult position and could not properly assess the claim should they wish to settle the action early by making a sanctioned payment to protect their position on costs.

74.  The costs consequence on A’s predicament in having to investigate the merits of his own case cannot be laid at the door of Rs who have made promptly the EC Sanctioned Payment with a view to protecting their costs position. Such clearly cannot constitute “special circumstances” justifying departure from the usual costs order against A in light of the principles stated in Or Siu Lung (supra) and Miah Mohammed Tara (supra) cited above.

75.  It was up to A to commence the EC Action before he could realistically assess quantum of the claim. On the other hand Rs would be entitled to make a sanctioned payment to protection their costs position anytime after proceedings have commenced in accordance with O 22 r 23(3).

76.  I accept Rs’ submissions that they had all along evinced a genuine intention to settle the claims by promptly making the EC Sanctioned Payment, and then the PI Sanctioned Payment in global settlement in the month after commencement of the PI Action. Such conduct of litigation, no doubt in furtherance of the underlying objectives of costs economical and effective case management, enhancing settlement and avoiding unnecessary costs, is to be commended.

77.  To conclude, A has not demonstrated any special circumstances such that it would be unjust for a usual costs to follow the event order to be made.

78.  On the other hand, it would be wholly unjust to deprive Rs of the protection of the EC Sanctioned Payment which they had secured by making the payment into court a year ago solely because they have subsequently made the PI Sanctioned Payment in global settlement of both actions.

79.  A’s argument that the PI Sanctioned Payment, encompassing the EC Sanctioned Payment, would have implied re-opening of the EC Sanctioned Payment with costs up to the date of acceptance defeats the underlying objectives of enhancing settlement and cannot stand.

80.  I conclude that A should bear Rs’ costs of the EC Action after expiry of the EC Sanctioned Payment on 27 September 2023 when he has not achieved an outcome more favourable than that paid in.

Indemnity costs?

81.  Rs seek costs of the EC Action after expiry of the EC Sanctioned Payment against A on an indemnity basis as stated in the Sanctioned Offer Letter.

82.  No submissions are made on the justification for indemnity costs which are normally penal in nature. Presumably Rs are relying on the costs sanctions under O 22 r 23(4) as A has not achieved an outcome more favourable than the EC Sanctioned Payment.

83.  I do not consider the O 22 r 23 regime should automatically apply in the present case given A did not fail to obtain a judgment better than the sanctioned payment prescribed under O 22 r 23(1). The late acceptance of the EC Sanctioned Payment by A was prompted by its inclusion in the PI Sanctioned Payment, and the fact that the acceptance of the PI Sanctioned Payment did extinguish the EC claim in its entirety.

84.  More importantly I have great reservation on the effects of the PI Sanctioned Payment which, tied with strings of unfavourable costs sanctions in the EC Action, is in my view not a valid sanctioned payment/offer under O 22 r 23 as discussed in para 54 hereinabove.

85.  I decline to grant costs against A on an indemnity basis as sought by Rs.

Late Filing by Rs of the Affirmation in Opposition

86.  As set out in paras 45 and 46 above on the background resulting in the Summons, this Court gave directions on 3 October 2024 for A to take out a summons with supporting affirmation within 14 days, and for Rs to file an affirmation in opposition (if necessary) within 14 days thereafter.

87.  A filed the Summons with the supporting Affirmation of Yip Kam Shi on 15 October 2024. Rs filed the Affirmation in opposition of Ho Ka Ho on 30 October 2024 (and served the same on 31 October 2024 accordingly to A). In A’s Affirmation in reply filed on 6 November 2024, A raised the matter of late filing by Rs of the Affirmation in opposition, and invited this Court not to take into account matters set out in Rs’ Affirmation in opposition.

88.  This has resulted in Rs’ solicitors writing another lengthy 3-page letter of protest dated 7 November 2024 to this Court. This is in my view wholly inappropriate for reasons stated in paras 47 to 51 above. Such matters should have been dealt with properly by way of submissions in the Summons.

89.  Upon this Court’s criticism, Rs’ solicitors took responsibility and undertook as stated in their written submissions to bear personally and not to charge their lay clients the costs of the said letter dated 7 November 2024.

90.  Turning back to the late filing complained of by A, I find that there was a 1-day delay in Rs’ filing of the Affirmation in opposition. Notwithstanding having asked this Court not to take Rs’ Affirmation in opposition into account in considering the Summons, A has in his Affirmation in reply referred to and responded to its contents (on a de bene esse basis according to A), without even beginning to mention any prejudice or procedural unfairness that A might have suffered by reason of the short delay.

91.  I consider it appropriate and have taken into account Rs’ Affirmation in reply in considering the Summons. I find A’s protest of the 1-day delay in Rs’ filing of the Affirmation in opposition to be academic and, other than adding to costs unnecessarily, not of any assistance to the court nor to the litigation.

Order

92.  I therefore make the following order:

(1) Leave be granted to A to accept the EC Sanctioned Payment in the sum of $131,500 (inclusive of interest but net of advance payments of $88,391.60) made by Rs on 30 August 2023 out of time;

(2) Rs do pay A’s costs of these proceedings (including all costs reserved if any) up to and including 27 September 2023, such costs to be taxed if not agreed; and

(3) A do pay Rs’ costs of these proceedings (including all costs reserved if any) after 27 September 2023, such costs to be taxed if not agreed.

93.  There is no reason why costs should not follow the event in respect of the Summons. I further grant a costs order nisi that A do pay Rs’ costs of the Summons (including costs of the Joint Letter, A and Rs’ letters to the court dated 2 and 3 October 2024 and the written submissions), to be taxed if not agreed.

94.  In the absence of application from the parties to vary this costs order within 14 days, the costs order nisi will become absolute.