TSE CHIU v. 郭健 AND OTHERS

DCEC 1141/2018

[2020] HKDC 749

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1141 OF 2018

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DECISION

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FACTUAL BACKGROUND

1.  The applicant (“Mr Tse”) worked as a China-Hong Kong container driver (中港貨櫃司機).

2.  On 6 June 2017 at about 1:30 pm, Mr Tse met with an accident when he was attending to and attempting to close the back door to a container mounted on the container tractor (owned by the 2^nd respondent).  It is alleged that the back door and its locking system were dilapidated and defective.  Mr Tse fell from the Tractor and landed on his head, sustaining injuries to his head and other parts of his body, including skull fracture and bleeding from his ears (the “Accident”). 

3.  Mr Tse claimed that at the time of the Accident, the 1^st and 2^nd respondents were carrying on business in the name of 大眾貨櫃運輸公司.  The 3^rd respondent was a limited company which paid the salary of the applicant.  Mr Tse claimed that he was employed by the 3^rd respondent (or alternatively by the 1^st and 2^nd respondents, who were the subcontractors of the 3^rd respondent) and claimed employees’ compensation against the respondents. 

4.  In support of his claim, Mr Tse’s case was that all out of pocket expenses were reimbursed by the respondents and that he was required to carry out deliveries as ordered by the respondents.

5.  The 1^st and 2^nd respondents denied they were the employers of the applicant or that they had paid salary to the applicant.  It is the respondents’ case that the applicant was an independent contractor and the 3^rd respondent and the applicant would share the service fees paid by the customers for each delivery made.

PROCEDURAL BACKGROUND

6.  The pre-trial review (the “PTR”) was held on 9 January 2020.  The 5-day trial was originally fixed to commence on 25 February 2020.  At the PTR, parties (both represented by counsel) confirmed to the court that they were ready for trial and no further application would be taken out. 

7.  In accordance with previous directions given, the applicant had served their written opening submissions on the respondents on 12 February 2020. 

8.  The original trial was however vacated and adjourned due to the General Adjournment Period (the “GAP”) and refixed to 21 September 2020.

APPLICATION

9.  In late August 2020, the 1^st to 3^rd respondents (together, the “respondents”) took out the following summonses:-

(a) Summons dated 19 August 2020 for leave to file 3 witness statements:

(1) the 2^nd supplemental witness statement of Kwok Ka Kit Danny (the 2^nd respondent),

(2) the supplemental witness statement of Kwok Kin (the 1^st respondent) and

(3) the witness statement of Tsang Ling;

(together, the “New Witness Statements”)

(b) Summons dated 25 August 2020 for leave to Amend the Answer.

10.  The applicant opposes both summonses.

EXPLANATION FOR NOT HAVING TAKEN OUT THE APPLICATIONS EARLIER

11.  Mr Tsang, counsel for the respondents accepted that the respondents had to provide reasons for why the application was taken out at such a late stage.

12.  The major reason was that during the GAP, the respondents had a change of counsel.  Counsel taking on the case had a different view and considered it necessary to file further additional witness statements.

13.  The respondents said that due to the pandemic, further instructions could not be taken until 28 July 2020.

14.  In other words, the delay was nothing else but the respondents’ own doing.

LEGAL PRINCIPLES

15.  Parties agreed on the applicable legal principles on the late admission of witness statements.  In Yeung Shuk Mei v Choi Sun Man & Anor[1], Registrar Lung (as he then was) set out the relevant authorities:-

“10. The relevant legal principles are trite. P has submitted the following authorities:

(a) Hong Kong Civil Procedure 2017 Vol. 1 §38/2A/10 on the jurisdiction of the court to allow supplemental witness statement to be served;

(b) Parsad v Great Wealthy Engineering Co Ltd [2012], HKLRD 705 §§6-7 where the court must balance the primary aim of securing the just resolution of the dispute in accordance with the substantive rights of the parties and other factors such as the right of a party relying on relevant evidence, probative value of the evidence, disruptions to the trial and prejudice to the other party;

(c) Chen Jinhui v Wong Kam San and Others (unreported, HCA 1524/2012, 29 April 2016, §29) the burden being on the applicant to give satisfactory explanation why indulgence should be given to the applicant;

(d) Tang Chung Wah v Jonathan Russell Leong and Others (unreported, HCA 169/2011, 15 April 2014, §19) the nature of the dispute between parties should be taken into account;

(e) Liu Wai Keung v Liu Wai Man now known as Liu Hiu Nam Vikki (unreported, HCA 1106/2011, 22 March 2013, §§11-13) where the court has to consider the probative value of the supplemental witness statement;

(f) Million Decade Ltd v Tung Fai also known as Dong Hui (unreported, HCA 1062/2013, 15 September 2015, §11) where the court will require the applicant to set out the factors in support of the application; and

(g) Evergreen (FIC) Ltd v Golden Cup Industries Ltd t/a Super Star Group (unreported, HCCT 14/2015, 26 July 2016) where the court, having considered the probative value of the evidence, allowed the application for serving supplemental witness statement at less than one week before trial.

D has no dispute with the above authorities, but has also cited the following authorities:

(h) Order 1A, r. 4 RHC of the Court’s powers of active case management;

(i) Nam Ching Wun v Tsun Un Pawn Shop & Ors (unreported, HCA 2151/2008, 7 October 2014 §§54-58) where the court emphasized that late applications should not receive the court’s sympathy if such application for admission of witness statement is the deliberate act of the applicant without good explanation and it would raise a new dimension or focus or shift the litigation goalposts, causing serious prejudice to the other party;

(j) Man Fong Hang v Man Ping Nam & Ors (unreported, HCA 7935/1998, 15 July 2003 §11) where the court adopted the UK approach to deal with non-adherence to time limits contained in the rules or directions of the court.  However, this case has, in §12 set out the way the court should act as stated by Sir Thomas Bingham MR: “Ultimately, it is a balancing exercise and the court has to consider all relevant factors on the facts and circumstances of the particular case before it. No single factor can be regarded as decisive or conclusive….”;

(k) Talent Weaving Dyeing & Printer Ltd v Able Billion Textiles Ltd [2013] 2 HKLRD 478 at §5) where the court set out the legal principle that a witness statement must only contain such material facts as a witness is able to prove of his own knowledge and must not contain inadmissible evidence, or any statement of information or opinion without leave of the Court; and

(l) Vastco Textile Ltd v Super Glory Corporation Ltd (unreported, HCA 1678/2009, 11 October 2011, §3) where the court held that the test as to whether the material sought to be expunged is whether the parts of the statement are material to the issues in dispute and the relief claimed.

11. This Court will also bear in mind the legal principles in its exercise of its judicial discretion. Interlocutory applications are usually matters for the court’s discretion in case management for a fair trial of the matter.  The court will bear in mind the following factors in its exercise of discretion:

(a) Order 1A, r.2(2), the underlying objectives;

(b) the court’s duty to prevent abuse for a fair trial; and

(c) the court being guided by the authorities of the higher courts.

Lam Sai Wan v Minloy Ltd. (unreported, HCA 31/2014, 18 October 2016).  See also Wing Mou Construction Co Ltd v Cosmic Insurance Corporation Ltd & Mansion Holdings Ltd (unrep. HCCT 40/2001, 20 June 2002) where the Court of Appeal stated at §15:

“(5) The exercise of the court’s discretion in any given case depends on a number of factors…… No exhaustive list of factors can be enumerated but I would suggest the following will regularly feature: the individual prejudice to the parties in the event an order is or is not made, the stage that the action has reached when the application is made, any delay in making the application and any delay that may be caused should an order be made. What weight the court will give to any particular factor will depend on the precise form of the order or orders sought.

(6) Ultimately, the discretion is exercised, …… as with any exercise of discretion by the court, orders should only be made where necessary, just and convenient.”

12. The court’s discretion must not be exercised mechanistically, which is also the remark of the Court of Appeal in Chan Cheung Ming Jacky v Siu Sin Man (formerly known as Siu Kit Ling [2014] 5 HKLRD 89 in deciding that delay alone in the application for subpoena, it remarked: “27.  The second caveat we have is about the comment of Poon J at para 6 of his judgment on the possibility of an application being dismissed on the basis of delay alone.  Whilst we would not rule out this possibility entirely, one must always bear in mind Order 1A Rule 2(2).  As with the exercise of other kinds of discretion, the exercise of case management power must be with reference of the facts and circumstances of the case before the court.  There is no place for the application of a mechanical rule that the court will invariably refuse an application simply because a party is guilty of serious delay without any good explanation.  The court must conduct an overall balancing exercise.”

13. In Wing Fai Construction Company Limited (in Compulsory Liquidation v Yip Kwong Robert & Others (2011) 14 HKCFAR 935 at §75(5), the Chief Justice adopted the following legal principles on delay:

“I would also adopt what was said by Neuberger J in Annodeus[2] regarding the court’s consideration of delay:- “Ninthly, it appears to me that it is normally relevant to consider the following factors. First, the length of the delay; secondly, any excuses put forward for the delay; thirdly, the degree to which the claimant has failed to observe the rules of court or any court order; fourthly, the prejudice caused to the defendant by the delay; fifthly, the effect of the delay on trial; sixthly, the effect of the delay on other litigants and other proceedings; seventhly, the extent, if any, to which the defendant can be said to have contributed to the delay; eighthly, the conduct of the claimant and the defendant in relation to the action; ninthly, other special factors of relevance in the particular case.”

ANALYSIS

16.  Bearing in mind the relevant legal principles, I turn to whether the objections made by the applicant to the admission of the New Witness Statements are valid.

Delay

17.  There is no dispute that the application is late.  By the time of the hearing of the application, there were only 3 weeks left before the commencement of the trial.

Relevance

18.  The main issue in dispute was whether the applicant was an independent contractor.  The applicant’s case is that he was an employee and would be ordered by the respondents to make deliveries and he was not responsible for any expenses. 

19.  The content of the proposed 2^nd supplemental witness statement of the 2^nd respondent includes:-

(1) an explanation in detail (29 paragraphs spanning more than 7 pages) the modus operandi of the 3^rd respondent;

(2) how the 3^rd respondent received and shared the service fees with the applicant for orders that the applicant chose to accept;

(3) how the operating expenses were shared amongst individual drivers and the 3^rd respondent;

(4) how the WeChat messages and working records only acted as a platform to link up the customers and individual drivers; and

(5) how individual drivers were paid.

20.  The proposed supplemental witness statement of the 1^st respondent mainly sought to corroborate and overlap with the evidence of the 2^nd respondent.  One additional area related to how the 1^st respondent invited the applicant to work with the 3^rd respondent. 

21.  I am of the view that the explanations sought to be put in on the initial understanding reached between the applicant and the 1^st respondent and the modus operandi of the 3rd respondent are relevant to the issues in dispute. 

22.  Another issue in dispute was the nature of the payments by the 3^rd respondent to the applicant.  The proposed witness statement of Tsang Ling (wife of the 1^st respondent) sought to give evidence in 5 paragraphs on how she received service fees from the customers and distributed them to individual drivers in accordance with the 3^rd respondent’s working records.  She also explained how the 1^st respondent instructed her to issue cheques to the applicant as advance payment of his service fees.  I am of the view that this evidence is relevant in the determination of whether there was an employment relationship between the applicant and the respondents.

23.  The relevance of the New Witness Statements is not disputed by the applicant.

Sufficiency of explanation

24.  The respondents changed counsel after the PTR on 27 June 2020.  It is of course the prerogative for the respondents to engage counsel of their own choice.  However, this right does not rank over and above the applicant’s right to not be ambushed at the eleventh hour. 

25.  None of the evidence contained in the New Witness Statements only recently arose because of a change in circumstances.  All of the information could have been provided much earlier.  I consider this new round of witness statements to be very much an afterthought (perhaps after receipt of the applicant’s Opening Submissions) caused by insufficient previous preparation by the respondents. There is no dispute that the delay is purely caused by the respondent themselves by their decision to change counsel at a late stage, after the original trial date.

26.  The PTR was on 9 January 2020.  The trial would have commenced in February 2020.  Previous counsel’s advice would have been known at the latest in February 2020.  The respondents did not decide to change counsel until 6 months later and did not manage to take instructions for new witness statements until 28 July 2020.  I do not accept that the pandemic could be sufficient justification for the delay in taking instructions.    Even though there was a pandemic, instructions needed not be taken via face-to-face meeting.  Telephone conference or even video conference would have served the same purpose.

27.  There is no evidence before the court on the 5 months of inactivity between the PTR (January 2020) and the day when the respondents instructed new counsel (June 2020). 

28.  I am of the opinion that the requirement for a full account and satisfactory explanation for the lateness of the application had not been fulfilled.

Do the New Witness Statements raise a new dimension to the respondent’s defence?

29.  Mr Tsang argued that the New Witness Statements sought to be put in raised no new dimension to the respondents’ defence.  He said that it had all along been the respondents’ case that the applicant had worked with the 3^rd respondent on a profit-sharing basis.  The respondents had not changed their case or advanced any new case in the new witness statements.

30.  I do not agree that just because the content of the New Witness Statements is consistent with the line of defence so far put forward, there is no new dimension raised:-

(a) the new evidence contained replies to matters raised in the applicant’s witness statement which was not before raised by the respondents, e.g. how the cryptic WeChat messages are to be understood.

(b) The New Witness Statements contained substantial new evidence raised, the 2^nd supplemental witness statement of the 2^nd respondent alone comes to 12 pages long.  The proposed supplemental witness statement of the 1^st respondent is 8 pages long. --- This is to be contrasted with the fact that originally the witness statements of the 1^st respondent and 2^nd respondent consisted of 3 sentences of 1 page each.  These original witness statements of the 1^st and 2^nd respondents only contained to a bare denial that there was any employment relationship between the applicant and the respondents. The 2^nd respondent subsequently filed a supplemental witness statement of 2 pages.  More than 90% of the content sought to be put in in the New Witness Statements did not feature in these original witness statements.

(c) Tsang Ling was a new witness and the evidence raised by her was completely new.

31.  Previously, with the bare denials in the original witness statements, the respondents were effectively simply putting the applicant to strict proof. With the New Witness Statements, there would be multiple bases of challenge. In such circumstances, Mr Tsang’s argument of there being no new dimension rings hollow and is rejected. 

Disruption to the trial

32.  Ms Chung for the applicant had informed the court that if leave were granted for the respondents to put in the New Witness Statements, they would be seeking leave to put in further witness statements within 14 days, just 7 days before the trial.  The suggested tight time frame is of course to avoid the possibility of the trial being adjourned. 

33.  Mr Tsang submitted that instead of filing supplemental witness statements, the applicant could just lead evidence during examination-in-chief to reply to the matters raised in the New Witness Statements.  With the amount of new evidence raised, it is unrealistic for Mr Tsang to argue that the applicant should just lead oral evidence.  With the amount of new evidence involved, there will be immense uncertainty to what the applicant would say by way of oral evidence.  Such uncertainty would lead to a risk of either side seeking an adjournment in the middle of the trial.  This is clearly undesirable.  It would only be fair that the applicant be afforded an opportunity to take instructions and consider putting in evidence in light of the New Witness Statements.

34.  With the indication from the applicant, it seems that even if the respondents were allowed to put in the New Witness Statements, the trial could proceed on the original dates.  However, whether the original 5 days reserved would be sufficient in light of the new evidence is another matter.  It is likely that with 5 witnesses (1 being new), the evidence might not be finished within the original allocated time, bearing in mind cross-examination will now be substantially longer with the new evidence from both sides.  There is a real possibility that the trial may need to be adjourned part-heard.

Prejudice to the applicant

35.  I do not agree with the respondents’ submission that there is no prejudice caused to the applicant that cannot be compensated by costs.

36.  One of the most obvious prejudice to the applicant is the fact that the applicant had already filed his written opening submissions in February 2020 pursuant to the court’s previous directions.  The applicant’s counsel had set out his case in detail and applied the evidence to the appropriate tests on whether someone was an employee or an independent contractor.  A detailed analysis on the evidence was also carried out whereby the deficiency of the respondents’ evidence was pointed out (in paragraphs 38 onwards in the opening submissions).  On the face of it, the new evidence in the New Witness Statements seem to correspond with a lot of the arguments made in the opening submissions.

37.  I consider it to be immensely unfair if the respondents would be able to “patch up” any deficiency in their evidence after having sight of how the applicant is going to run his case.

Fairness

38.  Mr Tsang is correct in saying that a court of law seeks to adjudicate on the real issues and disputes between the parties, and if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims or defences before the court for adjudication.

39.  However, Mr Tsang agrees that this principle is not be-all and end-all nor is it inevitably the paramount or superior principle that overrides the underlying objectives of reasonable expedition, procedural economy, cost-effectiveness and fairness between parties as enshrined in order 1A of the Rules of the High Court.

40.  As put by Master Marlene Ng (as her Ladyship then was) in Liu Chen v Chan Poon Wing and Anor[3]:-

“In the administration of justice, apart from substantive fairness, fairness and justice of the litigation procedure is also a necessary component, and hence the court must be vigilant to ensure procedural fairness.

41.  The applicant had been ready for trial since January 2020.  The respondents also indicated their readiness at the PTR.  The trial was only unfortunately vacated and adjourned for more than 7 months due to the pandemic and the GAP. The applicant should not unnecessarily be denied his chance to have his claims under the employees compensation scheme adjudicated as soon as possible.  Any further delay to the applicant’s right to proceed with trial caused by the trial being part-heard is clearly unjustifiable and unacceptable.

42.  I also took into account the fact that the applicant was represented by the Legal Aid.  The trial being rendered part-heard would inevitably lead to increased costs which might ultimately be borne by public funds.

Prejudice to the respondents if the new witness statements are not admitted

43.  I recognize that the respondents would be inevitably prejudiced by not having the new witness statements admitted into evidence.  However, as set out in the Court of Appeal case of Chan Wing Cheung, Allan v Ho Shu Yee, Susana[4]:-

“9. … ‑

(1) While it can be accepted that the Defendant will inevitably be prejudiced by not having witness statements admitted into evidence, the Judge had to balance this prejudice against the prejudice caused to the Plaintiff in allowing them in at this very late stage. The Plaintiff would be prejudiced by having to face an inevitable adjournment of a trial that had been fixed for hearing a very long time ago.  This was recognized by the Judge, rightly in my view, as being sufficient to constitute serious prejudice.

(2) The predicament that the Defendant finds herself in is entirely of her own making.  As I have already remarked, the question of the loans allegedly made to the Plaintiff (the main issue in this action) was one that must have been obvious to the Defendant since at least the pleadings stage.  Despite having said (in the 4th Checklist) that proofs were taken and that effectively she was ready for trial, the Defendant has waited until almost the last possible moment to introduce witness statements that contains substantial matters.

(3) It is a theme running through Mr Lam’s submissions that the only real prejudice suffered by the Plaintiff was one that could be compensated for in costs.  I have real doubts about this submission. Quite apart from the fact that the Defendant is legally aided (so that the benefit of any costs order may be limited), the Defendant suffers the prejudice of not having the trial take place at the scheduled time.  This is often overlooked when matters are adjourned.

(4) In any event, where an indulgence is sought from the Court, it would be a rare case indeed that this would be given, even on terms as to costs, without a satisfactory explanation being given to justify the grant of the indulgence.  The fact that this represents in the present case the first time that an indulgence had been sought by the Defendant is neither here nor there.”

I respectively adopt the above which are applicable also to the present case.

DISPOSITION

44.  In view of the above, having taken into account and balancing all of the relevant factors, the respondent’s summons dated 19 August 2020 is dismissed.

45.  In relation to the summons dated 25 August 2020 for leave to Amend the Answer, after Ms Chung’s confirmation that the preparation of the applicant’s case is not prejudiced, I allowed the amendments with adjustments agreeable to both parties.

COSTS

46.  The 1^st to 3^rd respondents do pay the applicant costs of and occasioned by the summons dated 25 August 2020, to be taxed if not agreed.  The applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

47.  The 1^st to 3^rd respondents do pay the applicant costs of and occasioned by the summons dated 19 August 2020, to be taxed if not agreed.  The applicant’s own costs be taxed in accordance with the Legal Aid Regulations.