HUNG CHUEN LUNG v. CHUNG JOSEPH and YIP JASON SIU LAM formerly t/a JC CONSTRUCTION (a firm) AND OTHERS

DCEC 2343/2021

[2024] HKDC 114

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 2343 OF 2021

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IN THE MATTER OF AN APPLICATION BETWEEN

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DECISION

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I. INTRODUCTION

1.  The dispute before me, as appears from the 2^nd respondent’s summons filed on 9 November 2023 (“R2’s Original Summons”) as subsequently amended on 24 November 2023 (“R2’s Amended Summons”) and the applicant’s summons filed on 15 December 2023 (“A’s Summons”), is about how the respondents should be named. Further, the 2^nd respondent proposed “final improvement to the current pleading” by way of a note (but not a summons) received by the court on 14 January 2014 (though dated 13 January 2014) just before the hearing. Although this “improvement” was described as “final”, at the oral hearing, the 2^nd respondent made another amendment to this “final improvement”, namely, he proposed at the hearing that the 1^st respondent should be deleted altogether.

2.  The 3^rd respondent acts in person. At the hearing, he made clear that he takes no position on the summonses.

II. PROCEDURAL HISTORY

3.  By an Application dated 9 November 2021 issued under the Employees’ Compensation Ordinance (Cap 282), the applicant claimed the 1^st respondent, “Chung Joseph and Yip Jason Siu Lam formerly trading as JC Construction”, which was a firm at the time of the accident on 18 January 2021, for employees’ compensation. By the nature of the claim, the applicant’s case was of course that the 1^st respondent was his employer.

4.  It turned out that JC Construction had been dissolved on 1 March 2021, prior to the commencement of the Application herein on 9 November 2021.

5.  With leave granted on 18 May 2022, the applicant amended the Application. The main amendments are concerning who was/were the applicant’s employers. The amendment described the applicant as “an employee employed by the 1^st respondent and/or the 2^nd respondent and/or the 3^rd respondent.” In other words, besides the possibility that the applicant was the partnership’s employee, it may also be that the applicant was an employee of the 2^nd respondent in his own individual capacity, or an employee of the 3^rd respondent in his own individual capacity, or their joint employee. Thus, the 2^nd respondent “Yip Jason Siu Lam” and the 3^rd respondent “Chung Joseph” were added individually.

6.  On 6 October 2023, the Application was fixed for trial to take place on 28 and 29 February 2024.

7.  It is convenient to deal with A’s Summons first.

III. A’S SUMMONS

8.  On 15 December 2023, the applicant issued A’s Summons for an amendment to the case title by deleting “Chung Joseph and Yip Jason Siu Lam formerly trading as” and adding “dissolved” to describe “JC Construction”.

9.  The general test for whether to grant leave for an amendment or not is whether the amendment is “necessary either for disposing fairly of the cause or matter or for saving costs”: see Order 20 rule 8(1A) of the Rules of the District Court (“RDC”). I add that while there may be a variety of ways to name the parties in the present circumstances, in determining whether to allow the amendments, the test is whether the amendments are “necessary either for fairly disposing of the cause or matter or for saving costs”. The test is not whether the suggested amendments would be better ways to name the parties.

10.  The applicant submits that the amendment is necessary. The reason is that it is to invoke Order 81 rule 1 of RDC. Order 81 rule 1 provides that:-

“Subject to the provisions of any written law, any 2 or more persons claiming to be entitled, or alleged to be liable, as partners in respect of a cause of action and carrying on business within the jurisdiction may sue, or be sued, in the name of the firm (if any) of which they were partners at the time when the cause of action accrued.” (emphasis added)

11.  In order for this rule to apply, the firm name must be used, and it is not sufficient to name the individuals with the description “trading as [the firm name]”, like the 1^st respondent here: see Hong Kong Civil Procedure 2024 Vol 1 §81/1/1. While Order 81 rule 1 provides procedural convenience only: see Hong Kong Civil Procedure 2024 Vol 1 §81/1/7, application of Order 81 rule 1 would also mean that if the applicant obtains judgment against the firm, the applicant may rely on the convenience available under Order 81 rule 5 in enforcing judgment against the firm’s assets. On the contrary, if Order 81 rule 1 has not been invoked when obtaining judgment, the applicant would not be able to rely on Order 81 rule 5: see Mary L Lynn alias Mary Loo v Consolidated Sales Ltd, CACV 7/1970 (undated).

12.  Though Order 81 rule 5 is also a convenience rule, it is something the applicant would be entitled to, and would save costs when enforcing judgment because of the convenience conferred upon thereunder. Therefore, I agree with the applicant that the deletion of “Chung Joseph and Yip Jason Siu Lam formerly trading as”, so that the applicant would be able to rely on Order 81 rule 5, is necessary.

13.  As regards “dissolved”, as explained in Hong Kong Civil Procedure 2024 Vol 1 §81/1/11, “these words [namely, ‘partners at the time when the cause of action accrued’ in Order 81 rule 1] enable the co-partners in a firm dissolved before action to sue or to be sued as a firm provided that co-partnership existed at the time the cause of action accrued.” Similarly, §81/3/15 states that “notwithstanding the dissolution, proceedings can be instituted against the late firm in the firm name, provided the dissolution is not prior to the accrual of the cause of action”. The rule does not require any phrase like “dissolved” or “a dissolved partnership” to describe the partnership. The important condition is that at the time when liability was incurred, the partnership had not been dissolved yet. Thus, the word “dissolved” or the like is not necessary.

14.  While the word “dissolved” is in my view unnecessary, given that I would grant leave for the deletion of “Chung Joseph and Yip Jason Siu Lam formerly trading as”, it may be convenient that the addition “dissolved” be added in one go for clarity purpose. This description was in fact what the 2^nd respondent initially sought as well.

15.  In the circumstances, in respect of A’s Summons:-

(1) Leave be granted for amendment as per the draft Application attached thereto.

(2) The amended Application be filed within 7 days from today.

(3) Service thereof be dispensed with.

IV. R2 AND R3

16.  It is convenient at this junction to explain why the applicant continues to sue each of the partner of JC Construction separately despite the invocation of Order 81 rule 1.

17.  Order 81 rule 1 concerns firms only. While each of the partners of the firm at the relevant time would be liable (if judgment is obtained against the firm), the liability arises from the partnership but not from their individual conduct outside the partnership. Thus, when a partner of a firm is also sued at the same time in his individual capacity for liability arising not from the partnership but from his own act, it is necessary to add that partner as a co-defendant. By doing so, it would be clear that liability in relation to that added defendant arises from his own act but not from the partnership, and that partner would have a chance to put his case in defence of his own individual position in relation to claims against him personally: see Hong Kong Civil Procedure 2024 Vol 1 §81/4/6.

18.  Thus, joining the 2^nd and 3^rd respondents separately remains necessary despite the application of Order 81 rule 1, given that the applicant’s alternative case is that the 2^nd or the 3^rd respondent was the applicant’s employer.

V. R2’S ORIGINAL SUMMONS

19.  On 9 November 2023, R2 issued R2’s Original Summons. By the Original Summons, the 2^nd respondent sought that:-

(1) The Application as against the 1^st respondent be discontinued.

(2) “formerly trading as JC Construction” be added to describe the 2^nd respondent and the 3^rd respondent.

20.  In support of R2’s Original Summons, R2’s handling solicitor made an affirmation giving mainly three reasons: (1) the 2^nd respondent had no administrative and managing power and did not make any capital contribution; (2) the partnership had been dissolved on 1 March 2021; and (3) there would be conflict of interest between the 2^nd and 3^rd respondents if the 3^rd respondent would be allowed to represent the partnership.

21.  I am totally at a loss as to why the Application should be discontinued against the 1^st respondent, or as the 2^nd respondent submits at the hearing, that the 1^st respondent should be deleted. The 2^nd respondent suggested in its solicitors’ letter of 12 December 2023, echoed by an affirmation filed on behalf of the 2^nd respondent subsequently on 27 December 2023, that because at the time of the commencement of the Application on 9 November 2021, JC Construction had already been dissolved on 1 March 2021, therefore the applicant was “wrong in suing a dissolved partnership from Day No. 1”. The 2^nd respondent has gone so far as to seek a wasted costs order against the applicant’s solicitors on the alleged ground that the dissolved partnership should not have been sued in the first place. I have no hesitation to say that the 2^nd respondent is plainly wrong. Even though at the time of R2’s Original Summons, Order 81 rule 1 was not invoked, the partners of a firm can certainly still be sued for the liability arising from the partnership for cause of action accruing during its existence, even though it was subsequently dissolved. The naming of the partners as “trading as [firm name]” simply shows that the liability of the individual partners arises from the partnership, whether dissolved or not. I see no reason why it was necessary to discontinue as against or delete the 1^st respondent.

VI. R2’S AMENDED SUMMONS

22.  On 23 November 2023, the R2’s Original Summons was amended with leave, with the costs of the Original Summons reserved. In the R2’s Amended Summons, the 2^nd respondent no longer seeks the discontinuance of the Application as against the 1^st respondent. Instead, the 2^nd respondent seeks to add “(a dissolved partnership)” to the end of the name of the 1^st respondent, and “formerly trading as one of the partners of JC Construction and also being sued in his own individual capacity” to the end of the name of each of the 2^nd and 3^rd respondents.

23.  These amendments are in my view completely unnecessary:-

(1) “a dissolved partnership” is unnecessary. As explained above, even if the firm is dissolved, claim against it for liability arising from the partnership when it existed is permitted.

(2) “formerly trading as one of the partners of JC Construction and also being sued in his own individual capacity” is also unnecessary. The case title, whether prior or subsequent to allowing A’s Summons, is sufficient to tell that (a) both partners are sued in their capacity of partners by the name of the 1^st respondent; and (b) each of the partners is also being sued in their respective individual capacity.

(3) The 2^nd respondent seemed to suggest in his supporting affirmation that this phrase “formerly trading as one of the partners of JC Construction and also being sued in his own individual capacity” was necessary to educate the 3^rd respondent who acts in person, but at the same time conceded it became no longer necessary because an EC judge explained to the 3^rd respondent the nature of the claim against the 3^rd respondent. Such suggestion is totally unmeritorious – one does not need to educate a party to litigation, and in any event one does not do so by way of an amendment to the case title. If it were really necessary, a letter of explanation would suffice.

(4) The 2^nd respondent also contends that because there is conflict of evidence between the 2^nd respondent and the 3^rd respondent, thus the 3^rd respondent should not be allowed to represent the partnership. I reject such contention. Even if the 3^rd respondent is allowed to represent the partnership as such, the trial court would no doubt notice that the other alleged partner (namely the 2^nd respondent) appears before it and would certainly take into account what he would say to the trial court and apply the partnership law to determine where the liability would lie as between the applicant and the respondents. Where appropriate at some other stage in some other forum, there may even be opportunity for the 2^nd and 3^rd respondents to argue on apportionment of the liability, if any. In any event, amending the case title like what the R2’s Amended Summons proposes is not helpful at all in this alleged conflict and representation issue.

24.  The latest proposed amendment by way of a note or letter just the day before today’s hearing is that the 1^st respondent be named “JC Construction (a firm)” and the 2^nd and 3^rd respondents’ respective names be qualified at the end with “formerly trading as one of the partners of JC Construction”. In my view, the proposed amendments to the 2^nd and 3^rd respondents’ names cannot fit well with the applicant’s alternative claim that he was employed by the 2^nd respondent or the 3^rd respondent in his individual capacity. Further, if the 2^nd and 3^rd respondents were sued in their capacity as partners, naming “JC Construction (a firm)” would suffice. Therefore, I find the latest proposed amendments unnecessary for fairly disposing of the matter or cause and for saving costs.

25.  At the hearing, the 2^nd respondent proposed further amendment – namely, deleting the 1^st respondent altogether, because, the 2^nd respondent repeats his submissions, the partnership had been dissolved and there would be conflict of interest and representation issue as between the 2^nd and 3^rd respondents. The 2^nd respondent further submits that it is not a discontinuance as against the 1^st respondent, because each of the 2^nd and 3^rd respondents has already been named as respondents “trading as one of the partners”. As explained in paragraph 13 above, a dissolution of a firm does not prevent the firm being sued. Also, there is no redundancy in joining the 2^nd and 3^rd respondents separately because as explained above, they are separately sued for their liability arising not from the partnership but from their respective own conduct.

26.  After the hearing, the 2^nd respondent faxed an order of another case where the 2^nd and 3^rd respondents were named as respondents separately therein with the description “trading as JC Construction” apparently in an attempt to convince me that the 2^nd respondent’s proposed amendments are consistent with that other case. However, there is no explanation of whether the 2^nd and 3^rd respondents were also alleged to have personal liability arising not from the partnership but from their own respective conduct, and there is no suggestion that the names of the respondents had been an issue and so there had been arguments over how the parties should be named. Therefore, I find the fax totally unhelpful.

27.  It remains for me to add that the 2^nd respondent, by its written submissions and oral submissions, time and again said that his proposed amendment are “the best in the world”. As said above, I am not here to determine which amendments are the best, or which amendments are better. I am here to determine whether the proposed amendments are necessary for fairly disposing of the matter or cause or for saving costs.

28.  In conclusion, all the amendments proposed by the 2^nd respondent are not necessary. Therefore, I dismiss R2’s Amended Summons (for the avoidance of doubt, including the 2^nd respondent’s latest proposals by way of a note or letter and at the hearing).

VII. COSTS

29.  In respect of the costs of A’s Summons, it is more of a case-management nature, the costs of which would not have been incurred had the applicant properly thought through at the outset of the action about how to invoke Order 81 rule 1 and the implication of the application of the rule. However, I see no reason why the 2^nd respondent would have to incur any costs in opposing A’s Summons. In the circumstances, I make no order as to costs in respect of this summons, and the applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

30.  In respect of R2’s Original Summons and R2’s Amended Summons, the 2^nd respondent submits that costs be in the cause because the 3^rd respondent acts in person and thus the hearing would have to take place in any event. The 2^nd respondent also submits that the 2^nd respondent’s application is necessary to educate the 3^rd respondent about how the matter should be proceeded with. I am unable to agree. Had there been no opposition to A’s Summons or no R2’s Original Summons and R2’s Amended Summons, there would not be such or such substantial time incurred. In the circumstances, I see no reason why costs should not follow the event. Thus I order that as between the applicant and the 2^nd respondent, costs of R2’s Original Summons and R2’s Amended Summons be to the applicant to be taxed if not agreed, and the applicant’s own costs be taxed in accordance with the Legal Aid Regulations.

31.  As regards the 3^rd respondent, as he has taken no position on the summonses, I make no order as to costs as between the applicant and the 3^rd respondent in respect of A’s Summons, no order as to costs as between the 2^nd respondent and the 3^rd respondent in respect of R2’s Original Summons and R2’s Amended Summons.