FALCON INSURANCE COMPANY (HONG KONG) LTD v. SUN PROFIT LOGISTICS (HK) LTD

DCCJ 4224/2023

[2025] HKDC 1843

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4224 OF 2023

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ASSESSMENT OF DAMAGES

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Introduction

1.  This is an assessment of damages for the recovery of damages (including costs and disbursements) paid out by the Plaintiff insurer on behalf of the Defendant who was the insured under an employee compensation insurance policy.

2.  On 13 November 2023, interlocutory judgment is entered against the Defendant (the “Interlocutory Judgment”), on the basis that the Defendant has failed to give any notice of intention to defend. Under the Interlocutory Judgment, it was adjudged that, the Defendant shall pay the Plaintiff damages to be assessed with costs.

3.  On 24 April 2024, the Plaintiff issued a Notice of Appointment of Assessment of Damages. Directions were given as to trial. Despite that all subsequent court orders were sent to the Defendant, it did not file any documents or witness statements for purposes of assessment of damages.

4.  The Plaintiff’s solicitors have filed two affirmations of service dated 9 and 19 June 2025 respectively. In view of them, I am satisfied that, the Defendant has been properly notified of the hearing and I proceed with the hearing in the absence of the Defendant.

The Plaintiff’s Case

5.  The Plaintiff called Mr Sin Man Hon, Vice President of the Claims Division, to give evidence on its behalf at the hearing of assessment of damages. He adopted his witness statement filed on 7 March 2024 as evidence-in-chief and answered the Court’s questions.

6.  I find that Mr Sin’s evidence is clear and direct, consistent with the contemporaneous records produced, and is not challenged by the Defendant. I accept his evidence in its entirety.

7.  The Plaintiff’s case is as follows.

8.  At the material times, the Defendant was insured by an employee compensation insurance policy No 81A-P4015859-ECI18-NS issued by the Plaintiff covering the period from 10 June 2018 to 9 June 2019 (the “Policy”).

9.  The Policy contained the following relevant clauses:-

“INSURING CLAUSE

…

Now this Policy witnesseth that if any Employee in the Insured’s immediate employ shall sustain bodily injury or death by Accident occurring … during the Period of Insurance within the Geographical Area and arising out of and in the course of his employment by the Insured in the Business

The Company will subject to Policy Limit of Indemnity and to the terms exceptions and conditions contained in or endorsed on this Policy (all of which are hereinafter collectively referred to as “the Terms of this Policy”) indemnify the Insured against costs and expenses incurred by or on behalf of the Insured with the Company’s written consent in connection therewith

...

Further provided that:

(a) the due observance and fulfilment of the Terms of this Policy in so far as they relate to anything to be done or not to be done or to be complied with by the Insured …

…

shall be condition precedent to any liability of the Company to make payment or to provide indemnity under this Policy.

AVOIDANCE OF CERTAIN TERMS AND RIGHT OF RECOVERY

If the Company is obliged by the Ordinance to pay an amount for which the Company would not have otherwise be liable under this Policy the Insured shall forthwith repay such amount to the Company.

...

Claims Settlement Conditions

(a) Claims Notification Demands etc.

In the event of any occurrence which may give rise to a claim under this Policy the Insured shall immediately give notice thereof in writing to the Company with full particulars.

… Every letter claim writ summons and process shall be forwarded to the Company immediately on receipt.”

10.  At the material times, one Mr Ko Hei Sun (“Mr Ko”) was employed by the Defendant as a warehouse worker. On 10 August 2018, Ko was assigned by the Defendant to work at a car park of Tat Yeung Road, Kwai Chung, New Territories. When he was opening the door of a cargo truck, the truck moved backward and his right index finger was trapped and clipped by the cargo door (the “Accident”).

11.  On 25 June 2019, Mr Ko first commenced Employees’ Compensation Case No 1509 of 2019 (“EC Action”) against the Defendant on for damages caused by the injuries he suffered in the Accident.

12.  On 17 July 2019, the Plaintiff sent a letter to the Defendant repudiating liability under the Policy as the Defendant has failed to notify the Plaintiff of the Accident and the related legal proceedings, which constitutes a breach of the Policy. The Plaintiff has not received any reply from the Defendant in this regard.

13.  On 28 July 2021, Mr Ko commenced Personal Injuries Action No 2284 of 2021 (“PI Action”) against the Defendant on the same Accident.

14.  The Defendant did not take part in the EC Action and the PI Action, nor did it provide any evidence or assistance to the Plaintiff in handling the EC Action and the PI Action.

15.  Eventually, the Plaintiff settled with Mr Ko the EC Action for HK$ 355,557 (inclusive of interest) under a court order dated 17 March 2023; and the PI Action for HK$ 505,557 (inclusive of interest) under a court order dated 12 May 2023.

16.  For both EC Action and PI Action, the Plaintiff agreed to pay Mr Ko costs, to be taxed if not agreed. The Plaintiff has engaged a law costs draftsman (“LCD”) to assess the reasonable range of costs incurred by Mr Ko. Following the advice of the LCD, the Plaintiff paid into Court on 22 March 2023 HK$ 100,000 by way of sanctioned payment of Mr Ko’s costs of the EC Action, and on 28 April 2023 HK$ 70,000 being the Plaintiff’s sanctioned payment of Mr Ko’s costs of the PI Action. Both offers were accepted by Mr Ko.

17.  On 27 September 2023, the Plaintiff commenced the present proceedings claiming against the Defendant for:-

(1)  A sum of HK$ 300,000 paid by the Plaintiff in settlement of Mr Ko’s claim in the EC Action against the Defendant;

(2)  A sum of HK$ 100,000 paid by the Plaintiff to Mr Ko being his costs and disbursements in the EC Action;

(3)  Legal costs and expenses incurred by the Plaintiff in the sum of HK$ 185,782.10 in the EC Action;

(4)  A sum of HK$ 150,000 paid by the Plaintiff in settlement of Mr Ko’s claim in the PI Action against the Defendant;

(5)  A sum of HK$ 70,000 paid by the Plaintiff to Mr Ko being his costs and disbursements in the PI Action; and

(6)  Legal costs and expenses incurred by the Plaintiff in the sum of HK$ 78,177.20 in the PI Action.

Applicable Legal Principles

18.  As pleaded and set out in the Plaintiff’s submissions, the Plaintiff relies on the following causes of action in recovering damages and costs paid out from the Defendant:-

(1)  An obligation implied by law to indemnify the Plaintiff who performed an obligation imposed under Part IV of the Employees’ Compensation Ordinance (Cap 282) (“ECO”) for which the Defendant was primarily responsible;

(2)  Section 42(3) of the ECO;

(3)  The Avoidance of Certain Terms and Rights of Recovery clause of the Policy (the “Recovery Clause”); and/or

(4)  Sections 3 and 4 of Civil Liability (Contribution) Ordinance (Cap 377).

19.  At the hearing, Mr Ho appearing for the Plaintiff referred this Court to AXA General Insurance Hong Kong Ltd v Chun Hing Geotechnical Engineering Ltd [2018] 1 HKLRD 848 and submitted that, as the Plaintiff has issued the Policy with the Defendant as the Insured and has performed an obligation under the law to pay Mr Ko compensation under section 43(1) of the ECO, following the reasoning in AXA General Insurance Hong Kong Ltd at §§67-68, the Defendant is therefore under an obligation implied by law to indemnify the Plaintiff.

20.  Mr Ho also cited Bank of China Group Insurance Co Ltd v Joint Venture Construction Engineering Ltd [2023] HKDC 837 at §§28-29 where it was found that, an employee compensation policy insurer is entitled to recover payments made to the employee and its own legal costs pursuant to Section 42(3) of the ECO and a clause in similar terms as the Recovery Clause.

21.  Mr Ho further submits that, in the present context, the Plaintiff should be allowed to recover as damages payments made by way of settlement of a claim brought against it provided that the settlement represented a reasonable sum.

22.  In view of the above, I am satisfied that in law the Plaintiff has the right to seek indemnification and/or contribution from the Defendant. I now turn to each of the heads of the Plaintiff’s claim.

Settlement Sum in the EC Action and the PI Action

23.  In the proceedings of the EC Action, Mr Ko confirmed that he was paid in advance by the Defendant the sum of HK$ 55,557. The Plaintiff has settled the EC Action with Mr Ko paying him HK$ 300,000 compensation, and for the PI Action paying him a further HK$ 150,000 damages.

24.  In this connection, Mr Ho for the Plaintiff asks this Court to consider whether the overall amount of HK$ 505,557 compensation for both the EC Action and the PI Action paid to Mr Ko is reasonable.

25.  In considering whether the overall settlement sum is reasonable, I have taken into account the following:-

(1)  In the Statement of Damages filed in the PI Action, Mr Ko claimed damages in the amount of HK$ 1,280,985 (exclusive of interest).

(2)  According to the evidence filed by Mr Ko in the EC Action, at the time of the Accident he was 54 years old, working for the Defendant at a monthly wage of HK$ 16,900.

(3)  According to the Certificate of Review of Assessment dated 6 February 2020, the Board certified Mr Ko as having injuries at the right index finger that resulted in a permanent 5% loss of earning capacity, with the period of absence from 10 August 2018 to 10 October 2019 considered necessary as a result of the injury.

(4)  According to the single joint expert report by Dr Chan Wai Fu dated 12 October 2021, the Accident caused near-amputation at distal interphalangeal joint level of the right index finger. Mr Ko was assessed to have suffered 6% permanent impairment of the whole person and 6% loss of earning capacity as a result of his injuries; he considered the sick leave certified was reasonable.

26.  Having considered the evidence in the above and the case authorities which Counsel for the Plaintiff has referred this Court to, I accept that the settlement sum is reasonable. I allow this head claimed in full in the amount of HK$ 300,000 and HK$ 150,000 as the sums paid by the Plaintiff to Mr Ko in the EC Action and the PI Action respectively.

Agreed Costs Paid to Ko in the EC Action and the PI Action

27.  The Plaintiff has also settled the quantum of costs in the EC Action with Mr Ko at HK$ 100,000, and for the PI Action at HK$ 70,000. The costs claimed by Mr Ko is vetted by a LCD engaged by the Plaintiff, with the detailed breakdown produced as evidence by the Plaintiff. I see no reason to question the reasonableness of the amount. I find that the Plaintiff should be allowed to recover the sums as claimed.

The Plaintiff’s own costs and disbursements

28.  The Plaintiff seeks to recover from the Defendant its own legal costs and disbursements in defending the EC Action and the PI Action. The Plaintiff claims HK$ 185,782.10 incurred in the EC Action (which included surveillance fees of HK$ 15,736 and fees of engaging a law costs draftsmen of HK$ 7,200) and HK$ 78,177.20 incurred in the PI Action (which included fees of the law costs draftsmen of HK$ 5,000).

29.  The Plaintiff’s claim is supported by inter alia the bill of costs of its solicitors, Messrs Zhong Lun, as well as contemporaneous records showing payments were made. The receipts of payment of various disbursements were also produced as evidence.

30.  Considering that the Defendant has not participated in both set of proceedings, I am satisfied that those were reasonable costs incurred by the Plaintiff in mitigating its loss caused by the Defendant’s breach of the Policy. The costs claimed by the Plaintiff’s solicitors and the disbursements cannot be said to be excessive or unreasonable, especially when compared with the costs paid out to Mr Ko. Therefore, I allow this claim in full.

Orders Made

31.  Accordingly, I assess the damages at HK$ 883,959.30 with particulars set out as follows:-

Settlement Sum paid in the EC Action	HK$ 300,000.00
Costs paid to Mr Ko for the EC Action	HK$ 100,000.00
The Plaintiff’s own legal costs and disbursements in the EC Action	HK$ 185,782.10
Settlement Sum paid in the PI Action	HK$ 150,000.00
Costs paid to Mr Ko for the PI Action	HK$ 70,000.00
The Plaintiff’s own legal costs and disbursements in the PI Action	HK$ 78,177.20
Total:	HK$ 883,959.30

32.  I also find that, the Plaintiff is entitled to interest on the sum awarded at the rate of 1% per annum above prime lending rate of HSBC from the date of writ (i.e. 23 September 2023) to the date of judgment, and thereafter at judgment rate until payment in full.

33.  Costs should follow the event. I order that the Plaintiff do have costs of the assessment with certificate for counsel. Having considered the Plaintiff’s Statement of Costs dated 16 June 2025, I summarily assess the Plaintiff’s costs of the whole action (including costs of the assessment with certificate for counsel) at HK$ 138,320.

34.  Lastly, I thank counsel for his assistance to this Court.