SIU YIN KWAN v. RICHSTONE INDUSTTIES CO LTD AND OTHERS

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JUDGMENT

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Fuad, J.A.:

1. These consolidated appeals are brought by the Eastern Insurance Co. Ltd. and arise out of proceedings under the Employees'  Compensation Ordinance, Cap. 282 ("the Ordinance"). They have unusual features.

2. On 9 September 1983, during the havoc wrought by typhoon "Ellen", the barquentine Osprey sank at sea with all hands. Among the sailors on board, whose bodies were never recovered, were Mr. Chan Ying Lung and Mr. Wang Poa Tsing. Just under one year later, the dependants of the two seamen filed separate applications for compensation under the Ordinance. The claims were made against "Richstone Industries Co. Ltd., authorised agent for Axelson Company Ltd." (I will refer to the companies, respectively, as "Richstone" and "Axelson"). Each claim was for $242,000, the maximum allowed under s.6 of the Ordinance.

3. On 26 September 1984, Richstone, in respect of each application, took out a summons seeking the following relief:"that Eastern Insurance Co. Ltd. be joined as a party to this action pursuant to the provision of s.43 of the Ordinance and that any sum due or becoming due to the Applicant be payable by the said company." Eastern Insurance came into the picture because the compulsory insurance of the crew of the Osprey for which provision is made in Part IV of the Ordinance was taken out with them. Judge Henry Wong granted the applications for joinder on 4 October 1984.

4. On 9 October, Eastern Insurance, in turn, took out a summons applying for a review of Judge Henry Wong's order, asking the Court, instead, to allow Eastern Insurance "to be joined as an additional Respondent to the proceedings pursuant to Rule 24 of the Employees' Compensation (Rules of Court) Rules". The Judge granted this application.

5. Then on 18 February 1985, matters took a more curious turn. In each case, Richstone filed a "Statement of Claim" against Eastern Insurance claiming a declaration that Eastern Insurance was liable to indemnify Richstone for such compensation etc. as is adjudged against Richstone "in this action".

6. On 8 March 1985, again in each case, Eastern Insurance applied by summons to have Richstone's Statement of Claim struck out. On 30 April 1985, Judge Roy duly struck out both Statements of Claim, holding that the District Court, in its special jurisdiction under the Ordinance lacked the necessary jurisdiction to deal with a claim for indemnity arising out of proceedings for compensation.

7. The matter then came before Judge Li on 22 May 1985, on "call-over". It is not entirely clear what happened on that day, but what is clear is that the Judge directed, while confirming Judge Henry Wong's order for the joinder of Eastern Insurance under Rule 24, that "the extent of the insurers participation at the trial shall be limited to the issue of: who was the employer of the deceased  person (Applicant) in each application at the time of the accident." By another order, he directed that in the place of the original Respondent in the applications for compensation, there should be substituted Richstone as the 1st Respondent, Axelson as the 2nd Respondent and Eastern Insurance as the 3rd Respondent; and the applications were duly amended.

8. It appears that the applications for compensation then came on for hearing before Judge Henry Wong on 4 September 1985. We do not know exactly what occurred then but the Judge's judgment dated 29 November notes that at the earlier hearing only counsel for the Applicants for compensation and counsel for Eastern Insurance were present, and that:

9. The continued hearing took place before Judge Henry Wong on 27 November. On this occasion, the Applicants were represented by Mr. Mitchell (Mr. Pirie had been acting for them before); Richstone and Axelson were represented by the same solicitors, and Mr. Bharwaney appeared for Eastern Insurance. There was some confusion as to what had transpired before Judge Li on 22 May 1985. After some discussion Mr. Bharwaney is recorded as having said:-

10. Mr. Bharwaney then submitted that if the Applicants had not been satisfied with Judge Li's decision not to enter judgment in their favour upon admission of liability by the 1st Respondent, they could have appealed against that decision. The position was that, apart from not entering judgment, Judge Li had ruled that the insurer should be allowed to participate in the hearing on liability. Mr. Mitchell in reply, said that once liability had been admitted by the legal representative of Richstone Co. Ltd., he could not see what there was left for Eastern Insurance to challenge. Nevertheless, he was prepared to call Mr. Bond to testify on liability, and he did so.

11. Mr. Bond, a solicitor, whose firm had been retained by Richstone and Axelson in connection with these applications for compensation, gave evidence and said that his initial instructions had been at first to deny liability but he was subsequently instructed to admit liability. Following those instructions, he had appeared on the call-over on 22 May 1985 before Judge Li and had admitted liability on behalf of his clients, viz. "Richstone Co. Ltd., authorised agents of Axelson Co. Ltd.". To his recollection there had been a discussion between Judge Li, Mr. Hui (solicitor for Eastern Insurance Co. Ltd.) and himself on the severance of Richstone Co. and Axelpon Co. into two Respondents. He had had no objection to that. However, this had not been recorded in the judgment. He had been released after his admission of liability on 22 May and later received amended pleadings which showed that Richstone Co. and Axelson Co. had become 1st Respondent and 2nd Respondent.

12. In cross-examination, Mr. Bond said that his admission of liability had been on the pleadings as they then stood in respect of "Richstone Co., authorised agents of Axelson Co." He added:

He acknowledged that in an affidavit he had sworn in connection with the summons taken out on 26 September 1984, he had deposed that the Applicants for compensation had been employed by Axelson on the Osprey. He added "instructions to me were that Axelson Co. was such employer. My admission of liability was made on that basis."

13. The Managing Director of Richstone, Mr. Pak, then gave evidence. He stated that in connection with the compensation cases he had given instructions to Mr. Bond's firm on behalf of Richstone and Axelson, and had instructed Mr. Bond to admit liability on behalf of both companies. In his cross-examination, he agreed that the Osprey was owned by Axelson, as shown on the Register of Shipping. He was also asked to look at the Applicants' employment contracts (with the Master of the Osprey on Axelson note paper) and the agreement by which Richstone had been appointed as general agent for Axelson in relation to the Osprey. These and other documents were made exhibits. Mr. Pak also acknowledged that the Master had been authorised by Axelson to engage the two deceased seamen; and referred to the Power of Attorney (which was also exhibited) under which Axelson authorised him to act in relation to the Employees' Compensation Ordinance.

14. In re-examination Mr. Pak was asked to look at the "compulsory" insurance policy and this showed that the "employer" and the "insured" was Richstone.

15. No evidence was called by Eastern Insurance. Mr. Mitchell submitted that Eastern Insurance had no legitimate interest in the claim before the Court and asked for judgment against both Richstone and Axelson as employers of the deceased sailors. The Court should, he argued, not be concerned with any question between them and Eastern Insurance. I interpolate here that although, as I have said, solicitors appeared on the record of the proceedings on 27 November as representing Richstone and Axelson, they did not take any part in them and both counsel seem to have agreed that "they were not before the Court any more."

16. Mr. Bharwaney contended before the Judge that the admission of liability had been made by Mr. Bond "for Richstone as authorised agents for Axelson", and after the amendments had been made alleging that the deceased had been employed by "Richstone and/or Axelson", no further admission had been made. On the evidence, he submitted, judgment should be entered only against Axelson.

17. Judge Henry Wong reviewed the evidence in his judgment delivered on 29 November and reached the conclusion that judgment for the Applicants for the full amounts they claimed should be entered against both Richstone and Axelson. Towards the end of his judgment he said:

18. In both cases, Eastern Insurance now appeal to this Court, broadly on the ground that the Judge, on the evidence, should have found that the seamen had been employed by Axelson. Apart from seeking orders in each appeal that judgment for the compensation claimed be entered against Axelson "as the only employer" of the deceased seamen, Eastern Insurance seeks an order that "nothing in the judgment of the Judge should prejudice [its] position as to its liability to indemnify either [Richstone or Axelson]." Costs orders in the Court below and in this Court are asked for against the Applicants for compensation.

19. It will have been seen that what should have been straightforward employees' compensation cases were protracted by a number of interlocutory applications (some entirely misconceived) which did not concern the central issue. The payment of the compensation due under the Ordinance to the dependants of the ill-fated sailors, about which there was ultimately no dispute, was thus inevitably, and unnecessarily delayed. We are told that the dependants have still to get their money. By the procedures adopted the Applicants were dragged into a dispute with which they were not concerned. I am bound to say that if s.43 of the Ordinance could not be prayed in aid for any reason, it would have been far better had the issue whether Eastern Insurance was liable under the relevant insurance policies (which was the real question sought to be resolved by the tortuous steps taken culminating in the somewhat extraordinary hearing of 27 November 1985) been tried separately in a Court with the appropriate jurisdiction.

20. However that may be, as has now been conceded by Mr. Mitchell, for the Applicants, there can be no doubt that on the evidence led before Judge Henry Wong on 27 November 1985, he should have found that the employer of the two seamen at the material time, for the purposes of the Ordinance, was Axelson. Clearly, Richstone was at all times the agent of Axelson, and if Richstone had anything to do with the employment contracts, they entered into them in a representative capacity and, upon the principle that the contract of the agent is the contract of the principal, Richstone were not themselves the seamen's employers. But, as my review of the evidence shows, the evidence pointed only to the fact (and it was a pure question of fact that the learned Judge had to decide) that the Master then in command of the Osprey had engaged the two seamen on behalf of Axelson.

21. In my view, therefore, with all due respect, the Judge's finding that the sailors had been employed at the material time jointly by Richstone and Axelson cannot stand.

22. I would allow the appeal to the extent of ordering that the award of compensation in each case be against Axelson alone.

23. I do not wish my judgment to be understood as approving anything the Judge said about the insurance policy taken out in respect of the seamen on p.5 of his judgment (p.10 of the appeal record) or as affecting any of the issues that might arise over rights under the policy.

24. Before I take leave of this appeal I think it needs to be said that the Legal Aid counsel concerned should have been more careful in drafting the original applications. His naming of the Respondent in each application as "Richstone Industries Co. Ltd. authorised agent of Axelson Co. Ltd." displayed a confusion of thought which played no small part in the procedural skirmishes that ensued..

Sir Alan Huggins, V.-P.:

25. I agree. In particular, I agree that much of the difficulty which has occurred in these proceedings, although not all of it, arises from the fact that the Applicants sued Richstone Industries Company Limited "as authorised agent of Axelson Company Limited". The original Application alleged that Richstone was the employer. The amended Application alleged that the employer was "the 1st Respondent and/or the 2nd Respondent".

26. Quite clearly, on the evidence, there was no joint employment and, equally clearly, Axelson was the employer. The Judge's finding to the contrary cannot stand, and I agree with the order which is proposed.

Cons, V.-P.:

27. I agree with my Lords and have nothing to add.