HE YU FEI v. XIONG XINXI t/a TAILOR-MADE FURNITURE AND ANOTHER

DCEC 1181/2022

[2025] HKDC 570

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1181 OF 2022

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DECISION ON COSTS

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A.  INTRODUCTION

1.  On 26 February 2025, I handed down the Judgment of the trial of the application of the Applicant pursuant to the Employees’ Compensation Ordinance (“the ECO”) for compensation (“the Application”). In the Judgment, I found that the 1^st Respondent, rather than the 2^nd Respondent, was the employer of the Applicant and ordered the 1^st Respondent to pay the Applicant compensation under the ECO. Upon considering the parties’ written submissions, I make the following decision on costs.

2.  Unless otherwise stated, I will adopt the abbreviations used in the Judgment in this Decision.

B.  Costs as between the Applicant and the 1^st Respondent

3.  As the Applicant has succeeded in his claim against the 1^st Respondent, costs should follow the event.

4.  By the 2^nd Affirmation of Liu Sin Kwan Carina dated 6 March 2025, the Applicant disclosed that by a letter dated 11 April 2024 from his solicitors to the Respondents’ then solicitors, the Applicant had made a Sanctioned Offer to the Respondents in relation to the Application and the personal injuries claim DCPI 579/2024 (“the PI Claim”) by the Applicant (as Plaintiff) against the Respondents (as the Defendants) (“the Sanctioned Offer”). In the Sanctioned Offer, the Applicant asked the Respondents to pay a total of HK$250,000 (inclusive of interest but on top of the advance payment of HK$15,000) plus costs of the above 2 proceedings on a party and party basis to be taxed if not agreed, as full and final global settlement of the Application and the PI Claim.

5.  The last day for the Respondents to accept the Sanctioned Offer was 9 May 2024. Neither Respondents have responded to the Sanctioned Offer.

6.  The Applicant invokes Order 22 Rule 24 of the RDC and asks this Court to (a) order the 1^st Respondent to pay the Applicant’s costs on an indemnity basis after 9 May 2024 (Order 22 Rule 24 (3) (a)) (“the Indemnity Costs Order”); and (b) interest on those costs at a rate of not exceeding about judgment rate (Order 22 Rule 24 (3) (b)) (“the Enhanced Interest Order”).

7.  In the 1^st Respondent’s written submissions §(2), she states that she has no objection to the Indemnity Costs Order[1]. The 1^st Respondent did not make any submissions regarding the Enhanced Interest Order proposed by the Applicant.

8.  Having considered the Sanctioned Offer, I am satisfied that it has fulfilled all the requirements prescribed under Order 22 Rule 5 of the RDC. As the 1^st Respondent has failed to do better than the Sanctioned Offer in the Application, according to Order 22 Rule 24 (4), the Court shall make the orders referred to in Order 22 Rules 24 (2) and (3) unless it considers it unjust to do so.

9.  As provided in Order 22 Rule 24 (5) of the RDC, in considering whether it would be unjust to make the orders referred to in sub-paragraphs 24 (2) and (3), the Court shall take into account all the circumstances of the case including:

a.  The terms of the Sanctioned Offer;

b.  The stage in the proceedings at which the Sanctioned Offer was made; and

c.  The conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.

10.  I do not consider there to be any factors rendering it unjust for me to grant the orders in Order 22 Rules 24 (2) and (3) of the RDC:

a.  The Sanctioned Offer was made to the Respondents back on 11 April 2024, more than 4 months before the commencement of the trial of the Application;

b.  The Sanctioned Offer was considerably more favorable to the 1^st Respondent than the outcome of the Application. In the Sanctioned Offer, the Respondents were asked to pay HK$250,000 (inclusive of interest but on top of the advance payment of HK$15,000) plus costs in settlement of both the Application and the PI Action. Eventually, even for the Application alone, the 1^st Respondent was ordered by this Court to pay HK$479,857 together with interest and costs to the Applicant; and

c.  The Respondents had not sought any clarification from the Applicant regarding the terms of the Sanctioned Offer. They simply did not respond to it.

11.  The 1^st Respondent was also unable to identify any circumstances which render it unjust for the Court to make the orders under Order 22 Rules 24 (2) and (3), §1 of the 1^st Respondent’s submissions merely rehashed her arguments put forward in the Application in denying that she was the employer of the Applicant, which have already been rejected by me.

12.  For the above reasons, I consider it appropriate for me to make the Indemnity Cost Order and the Enhanced Interest Order.

13.  As for the interest rate of the Enhanced Interest Order, the Applicant did not put forward any proposal as to the appropriate rate. Taking into account all the circumstances of the case, I consider that enhanced interest at a rate of 0.5% above the judgment rate on the costs incurred after 9 May 2024 would be appropriate.

C.  Costs as between the Applicant and the 2^nd Respondent

14.  In relation to the costs of the 2^nd Respondent, the Applicant invites this Court to make a Sanderson Order, ordering the 1^st Respondent to pay the costs of the 2^nd Respondent in the proceedings.

15.  I accept the Applicant’s submissions that it was reasonable for the Applicant to join the 2^nd Respondent in the Application, having regard to all the circumstances of the case: see eg Fung Chun Man v Hospital Authority and Anor HCPI 1113/2006 (unrep, 20 February 2012) per Bharwaney J at §5.

16.  As I have found in §27 of the Judgment, throughout the Applicant’s employment, the 1^st Respondent was the only person who contacted the Applicant, and the Applicant was not aware of the existence of the 2^nd Respondent at all.

17.  In the letter to the Labour Department dated 8 September 2021 explaining why no report was made to the Labour Department after the Accident took place, the 1^st Respondent replied as a representative of the 2^nd Respondent and claimed that the Applicant was an independent contractor of Mr Chan.

18.  When the Applicant first took out the Application on 22 June 2022, he only pursued against the 1^st Respondent as the sole respondent.

19.  In a letter from the 1^st Respondent’s then solicitors to the Legal Aid Department dated 31 October 2022 (“the Letter”), the 1^st Respondent alleged that the Applicant was an independent contractor of the 2^nd Respondent. Alternatively, even if there were any employment relationship, it should be between the Applicant and the 2^nd Respondent. In the said letter, the 1^st Respondent further pointed out that the lease of the Premises was entered into by the 2^nd Respondent.

20.  In such circumstances, I agree with the Applicant that it was reasonable for him to have joined the 2^nd Respondent in the Application. It was the 1^st Respondent herself who repeatedly suggested that the 2^nd Respondent (rather than herself) was the entity dealing with the Applicant and Mr Chan. In the Letter, the 1^st Respondent went on to claim that in the event that there were to be any employment relationship, the employer should be the 2^nd Respondent.

21.  Therefore, I will grant a Sanderson Order, requesting the 1^st Respondent to pay the costs of the 2^nd Respondent.

D.  Disposition on Costs

22.  I make the following costs order:

a.  The 1^st Respondent do pay to the Applicant his costs of and occasioned by this Action from the date of the ECC Application up to and including 9 May 2024 on a party and party basis, such costs to be taxed if not agreed;

b.  The 1^st Respondent do pay to the Applicant his costs of and occasioned by this Action after 9 May 2024 on an indemnity basis, such costs to be taxed if not agreed, with interest on the said costs at a rate of 0.5% above judgment rate;

c.  The 1^st Respondent do pay the costs of the 2^nd Respondent of this Application on a party and party basis, such costs to be taxed if not agreed;

d.  Certificate for Counsel for the trial of the Application;

e.  The Applicant’s own costs be taxed in accordance with the Legal Aid Regulations.